THE MINISTRY OF FINANCE
Circular No. 06/2012/TT-BTC of January 11, 2012,
guiding the implementation of a number of articles of
the Law on Value-Added Tax and the Government’s
Decrees No. 123/2008/ND-CP of December 8, 2008, and
No. 121/2011/ND-CP of December 27, 2011
Pursuant to June 3, 2008 Law No. 13/2008/QH12 on Value-Added Tax;
Pursuant to November 29, 2006 Law No. 78/2006/QH11 on Tax
Administration;
Pursuant to the Government’s Decree No. 123/2008/ND-CP of December
8, 2008, detailing and guiding a number of articles of the Law on ValueAdded Tax;
Pursuant to the Government’s Decree No. 121/2011/ND-CP of December
27, 2011, amending and supplementing a number of articles of the
Government’s Decree No. 123/2008/ND-CP of December 8, 2008,
detailing and guiding a number of articles of the Law on Value-Added
Tax;
Pursuant to the Government’s Decree No. 118/2008/ND-CP of November
27, 2008, defining the functions, tasks, powers and organizational
structure of the Ministry of Finance;
The Ministry of Finance guides the implementation of value-added tax as
follows:
Chapter I
GENERAL PROVISIONS
Article 1. Scope of regulation
This Circular provides taxable objects, non-taxable objects, taxpayers, tax
bases and tax calculation methods, and credit and refund of value-added
tax.
Article 2. Taxable objects
Liable to value-added tax (VAT) are goods and services used for
production, business and consumption in Vietnam (including goods and
services purchased from overseas organizations and individuals), except
those not liable to VAT specified in Article 4 of this Circular.
Article 3. Taxpayers
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VAT payers are organizations and individuals producing or trading in
VAT-liable goods and services in Vietnam, regardless of their business
lines, forms and organization (below referred to as business
establishments) and organizations and individuals that import from abroad
goods or purchase services liable to VAT (below referred to as importers),
including:
1. Business organizations established and making business registration
under the Enterprise Law, the Law on State Enterprises (now the
Enterprise Law) or the Law on Cooperatives.
2. Economic organizations of political organizations, socio-political
organizations, social organizations, socio-professional organizations,
people’s armed forces units, non-business organizations and other
organizations.
3. Foreign-invested enterprises and foreign parties to business cooperation
contracts under the Law on Foreign Investment in Vietnam (now the
Investment Law); foreign organizations and individuals conducting
business activities in Vietnam without establishing legal entities in
Vietnam.
4. Individuals, households, groups of independent business persons and
other entities engaged in production, business or import activities.
5. Vietnam-based production and business organizations and individuals
that purchase services (including services associated with goods) from
foreign organizations without permanent establishments in Vietnam or
overseas individuals being non-residents in Vietnam. In this case, service
purchasers are taxpayers.
Permanent establishments and non-residents in Vietnam are determined
under the laws on enterprise income tax and personal income tax.
Article 4. Objects not liable to VAT
1. Products of cultivation (including products from planted forests) and
husbandry, cultured and fished aquatic and marine products which have
not yet been processed into other products or have only been preliminarily
processed by ordinary methods then sold by producing or fishing
organizations or individuals themselves and at the stage of importation.
Products preliminarily processed by ordinary methods are those which
have only been cleaned, sun-dried, heat-dried, peeled, pitted, cut, salted,
frozen or otherwise ordinarily preserved.
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Example 1: Sun-drying, heat-drying, peeling, pitting or cutting of
cultivation products; cleaning, sun-drying, heat-drying, salting or icing of
cultured or fished aquatic and marine products.
2. Animal breeds and plant varieties, including breeding eggs and animals,
seedlings, seeds, seeding twigs and bulbs, sperms, embryos and genetic
materials at the stages of rearing, importation and trading. Animal breeds
and plant varieties not liable to VAT are those imported and traded by
establishments possessing animal breed or plant variety business
registration certificates issued by state management agencies. Animal
breeds or plant varieties subject to quality standards promulgated by the
State must satisfy state-prescribed conditions.
3. Water irrigation and drainage; soil plowing and harrowing; intra-field
canal and ditch dredging for agricultural production; services of harvesting
farm produce.
4. Salt products made from seawater, natural rock salt, refined salt and
iodized salt, the principal component of which has the chemical formula of
NaCl.
5. State-owned houses sold by the State to current tenants.
6. Transfer of land use rights.
7. Insurance including life insurance; human health and accident
insurance; student insurance and insurance services related to humans;
livestock insurance, crop insurance and other agricultural insurance
services; reinsurance.
8. Financial activities:
a/ Credit extension services provided by credit institutions in the following
forms:
- Loan provision;
- Discount and rediscount of negotiable instruments and other valuable
papers;
- Bank guarantee;
- Financial leasing;
- Issuance of credit cards;
- Domestic factoring; international factoring, for banks licensed to provide
international payment;
- Other forms of credit extension under law.
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Assets which are used to secure loans of VAT payers or assets the
ownership of which has been transferred to lenders, when sold, are subject
to VAT, except those not liable to VAT specified in Article 4 of this
Circular.
Example 2: Limited Liability Company A mortgages a machinery and
equipment chain to borrow a loan from Bank B. When the loan matures
under the credit contract, as Company A is unable to repay its debt, Bank B
sells the security asset (regardless of whether or not the ownership of such
asset has been transferred to Bank B) to recover the debt. In this case, such
asset is liable to VAT.
b/ Securities trading, covering securities brokerage, securities dealing,
securities issuance underwriting, securities investment consultancy,
securities depository, securities investment fund and securities investment
company management, securities investment portfolio management,
market organization services provided by stock exchanges or securities
trading centers, services involving securities registered or deposited at
Vietnam Securities Depository, provision of margin loans, advance
payment for securities sale and other services specified by the Ministry of
Finance.
Supply of information on, and organization of, auctions for sale of shares
of issuing organizations, and technical assistance for online securities
trading by Securities Stock Exchanges.
c/ Capital transfer, covering the transfer of part or the whole of invested
capital amounts, including sale of enterprises to other enterprises for
production and business; securities transfer; and other forms of capital
transfer under law.
d/ Debt sale.
e/ Foreign currency trading.
f/ Derivative financial services, including interest rate swap, forward
contracts, future contracts, foreign exchange put and call options and other
derivative financial services under law.
9. Healthcare and animal health services, including medical examination
and treatment and preventive medicine services for humans and livestock,
birth control services, health convalescence and functional rehabilitation
services for patients.
Healthcare services cover also transportation of patients, lease of patient
rooms and beds at medical establishments; test, screening, radiograph,
blood and blood preparations for patients.
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In case a medical treatment package (as provided by the Ministry of
Health) covers also medicaments, the revenue from these medicaments is
not liable to VAT.
10. Public-utility post and telecommunications services and universalized
Internet services under the Government’s programs; post and
telecommunications services provided from abroad to Vietnam (incoming
services).
11. Public services on sanitation and water drainage in streets and
residential quarters; maintenance of zoos, flower gardens, parks and street
greeneries and public lighting; and funeral services, regardless of their
funding sources. Specifically:
a/ Public services on sanitation and water drainage in streets and
residential quarters provided to organizations and individuals include
garbage and waste collection, transportation and treatment; wastewater
drainage and treatment; suction, transportation and treatment of sludge and
sink residues; dredging of lavatories and wastewater drainage systems;
public toilet cleaning; maintenance of hygiene for mobile toilets; and
collection, transportation and treatment of other wastes.
House and office cleaning services provided by service establishments are
liable to VAT.
Example 3: Limited Liability Company B provides office cleaning services
to unit C and lobby and elevator cleaning services to apartment building H,
these services are liable to VAT.
b/ Maintenance of zoos, flower gardens, parks and street greeneries covers
activities of managing, planting and tending trees and protecting birds and
animals in parks, zoos, public places, national forests and national parks.
c/ Public lighting means lighting of streets, lanes and alleys in residential
areas, flower gardens and parks.
d/ Funeral services provided by establishments with the function of
providing funeral services cover activities of leasing funeral homes,
hearses and cars, burial, cremation and disinterment.
12. Maintenance, repair and construction of cultural, art and public-utility
works, infrastructure facilities and houses for social policy beneficiaries
funded with people’s contributions and humanitarian aid.
For funding sources other than people’s contributions (including amounts
contributed or donated by organizations and individuals) and humanitarian
aid, if the amount from these sources does not exceed 50% of the total
funds used for a work, the whole value of the work is not liable to tax.
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Social policy beneficiaries include people with meritorious services as
specified by the law on people with meritorious services; social relief
beneficiaries entitled to state budget allowances; members of households
classified as poor or living just above the poverty line; and other cases
under law.
13. Teaching and vocational training as provided by law, including also
teaching of foreign languages, informatics, dancing, singing, painting,
music, drama, circus, physical training and sports; child nursing, and other
job-training activities aiming to train, retrain and raise educational level or
professional knowledge and skills.
For education institutions from preschools to upper secondary schools that
collect school meal and pupil transportation charges and have other
revenues through authorized collection and spending, these charges and
revenues are not liable to VAT.
Revenues earned from provision of boarding services to pupils, students
and learners and training activities (including also organization of exams
and grant of certificates as part of the training process) of training
institutions are not liable to VAT. Revenues from the service of organizing
exams and granting certificates not associated with training are liable to
VAT.
14. Radio and television broadcasting funded with the state budget.
15. Publication, import and distribution of newspapers, magazines and
specialized bulletins, political books, textbooks, teaching course books,
law books, scientific and technical books, books printed in ethnic minority
languages, and pictures, photos and posters for public communication and
mass agitation purposes, including those recorded in audio-visual tapes
and disks or electronic files; printing of banknotes.
Newspapers, magazines and specialized bulletins cover also transmission
of their pages.
Political books are books disseminating the political line of the Party and
the State, serving political tasks under specific themes or topics, serving
anniversaries or traditional days of organizations, levels, sectors and
localities; statistic books; books about good people and good deeds; and
books of speeches, research and theoretical papers of Party and State
leaders.
Textbooks are books used for teaching and learning at the levels from
preschool to upper secondary school (including reference books for
teachers and pupils relevant to contents of education curricula).
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Teaching course books are books used for teaching and learning in
universities, colleges, professional secondary and vocational training
schools.
Law books are books of legal documents of the State.
Scientific and technical books are books introducing and guiding scientific
and technical knowledge directly related to production and various
scientific and technical sectors.
Books printed in ethnic minority languages include also bilingual books in
Vietnamese and an ethnic minority language.
Public communication and mass agitation pictures, photos and posters are
pictures, photos, posters, leaflets and brochures used for public
communication and mass agitation purposes, slogans, leaders’ pictures, the
Party’s flag, the national flag, the Youth Union’s flag, the Young Pioneers
League’s flag.
16. Mass transit by bus and tramcar means public transportation of
passengers by bus or tramcar along specified routes within provinces,
urban centers and in their vicinities under the Ministry of Transport’s
regulations.
17. Goods which cannot be produced at home and are imported in the
following cases:
a/ Machinery, equipment and supplies imported to directly serve scientific
research and technological development activities;
b/ Machinery, equipment, spare parts, special-use means of transport and
supplies which need to be imported for prospecting, exploring and
developing oil and gas fields;
c/ Aircraft (including aircraft engines), derricks and ships imported to form
fixed assets of enterprises or hired from abroad for production and
business, including cases in which such goods are imported and then
subleased.
In order to identify goods not liable to VAT at the stage of importation
under this Point, importers shall produce to customs offices documents as
guided in the Ministry of Finance’s regulations on customs procedures;
customs inspection and supervision; import and export duties and tax
administration of imports and exports.
The Ministry of Planning and Investment shall promulgate the list of
machinery, equipment and supplies which can be produced at home, for
use in distinguishing them from those which cannot be produced at home
and need to be imported to directly serve scientific research and
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technological development; the list of machinery, equipment, spare parts,
special-use means of transport and supplies which can be produced at
home, for use in distinguishing them from those which cannot be produced
at home and need to be imported for prospecting, exploring and developing
oil and gas fields; and the list of aircraft, derricks and ships which can be
produced at home, for use in distinguishing them from those which cannot
be produced at home and need to be imported to form fixed assets of
enterprises or hired from abroad for production, business or lease.
18. Weapons and military equipment exclusively for defense and security
purposes.
a/ Weapons and military equipment exclusively used for defense and
security purposes are specified in the lists of weapons and military
equipment exclusively for defense and security purposes promulgated by
the Ministry of Finance after reaching agreement with the Ministry of
National Defense and the Ministry of Public Security.
Weapons and military equipment exclusively used for defense and security
purposes not liable to VAT must be finished products in complete sets or
parts, accessories and packages used exclusively for assembling and
preserving finished products. The service of repairing these weapons and
military equipment provided by enterprises of the Ministry of National
Defense or the Ministry of Public Security is also not liable to VAT.
b/ Weapons and military equipment (including supplies, machinery,
equipment and spare parts) exclusively used for defense and security
purposes which are exempt from import duty under the Law on Import
Duty and Export Duty or imported within annual quotas approved by the
Prime Minister.
Dossiers and procedures for weapons and military equipment not subject to
VAT at the stage of importation comply with the Ministry of Finance’s
regulations on customs procedures; customs inspection and supervision;
import and export duties and tax administration of imports and exports.
19. Imported goods and goods and services sold to organizations and
individuals for use as humanitarian or non-refundable aid as follows:
a/ Goods which are imported for use as humanitarian aid or non-refundable
aid goods and certified by the Ministry of Finance;
b/ Gifts given to state agencies, political organizations, socio-political
organizations,
socio-political-professional
organizations,
social
organizations, socio-professional organizations or people’s armed forces
units under the law on gifts;
c/ Gifts given to individuals in Vietnam under the law on gifts;
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d/ Personal effects of foreign organizations and individuals within
diplomatic immunity quotas under the law on diplomatic immunities; and
personal effects brought along by overseas Vietnamese upon their return to
the country;
e/ Personal effects within duty-free luggage quotas;
The quotas of imported goods not subject to VAT at the stage of
importation comply with the import duty-free quotas prescribed in the Law
on Import Duty and Export Duty and its guiding documents.
Goods imported by organizations and individuals entitled to diplomatic
immunities under the Ordinance on Diplomatic Immunities are not liable to
VAT. If these organizations or individuals purchase goods and services in
Vietnam and pay VAT thereon, they will be eligible for tax refund under
Clause 7, Article 18 of this Circular.
Subjects, goods, procedures and dossiers for enjoying VAT exemption
under this Article comply with the Ministry of Finance’s guidance on VAT
refund for Vietnam-based diplomatic missions, consulates and
representative agencies of international organizations.
f/ Goods and services sold to foreign organizations or individuals or
international organizations for use as humanitarian aid or non-refundable
aid to Vietnam.
To enjoy VAT exemption for goods and services purchased in Vietnam for
use as humanitarian aid or non-refundable aid to Vietnam, an international
organization or a foreigner shall send to the goods seller a document
clearly stating its/his/her name and the quantity or value of the purchased
goods and containing the Ministry of Finance’s written certification of
such aid.
When selling goods, the business establishment shall issue an invoice
according to the law on invoices and keep the document of the
international organization or its Vietnamese representative agency as a
basis for tax declaration. Such an invoice must clearly state that goods are
sold to a foreign organization or individual or international organization
for use as non-refundable aid or humanitarian aid, and not liable to VAT.
In case a foreign organization or individual or international organization
purchases goods or services in Vietnam for use as non-refundable aid or
humanitarian aid and has paid VAT-inclusive prices, it/he/she will be
eligible for tax refund under Clause 6, Article 18 of this Circular.
20. Goods transported from a border gate to another or transited through
the Vietnamese territory; goods temporarily imported for re-export, goods
temporarily exported for re-import; raw materials imported for export
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production or processing under export production or processing contracts
signed with foreign parties.
Goods and services that are sold and purchased between foreign countries
and non-tariff zones and between non-tariff zones.
Non-tariff zones include export processing zones, export processing
enterprises, bonded warehouses, bonded zones, special trade and economic
zones, trade and industrial zones and other economic zones established and
enjoying tax incentives like non-tariff zones under the Prime Minister’s
decisions. Goods purchase, sale and exchange relations between these
zones and outside areas are import and export relations.
Dossiers and procedures for determining and deciding on non-collection of
VAT in these cases comply with the Ministry of Finance’s regulations on
customs procedures; customs inspection and supervision; import and
export duties and tax administration of imports and exports.
21. Technology transfer under the Law on Technology Transfer;
assignment of intellectual property rights under the Law on Intellectual
Property. For technology transfer or intellectual property right assignment
contracts accompanied with machinery and equipment transfer, only the
value of transferred technology or assigned intellectual property rights is
not liable to VAT. If the value of transferred technology or assigned
intellectual property rights cannot be separated, VAT will be imposed on
both the value of transferred technology or assigned intellectual property
rights and that of machinery and equipment.
Computer software includes software products and software services as
provided by law.
22. Gold imported in the form of bar or ingot and gold not yet fashioned
into fine-art articles, jewelry or other products.
Gold in the form of bar or ingot and gold in an unfashioned state shall be
determined under the law on gold management and trading.
23. Export products that are unprocessed exploited natural resources and
minerals.
Unprocessed exploited natural resources and minerals are those not yet
processed into other products, including also minerals already screened,
sorted, grinded, crushed or treated for higher concentrations or other
natural resources already cut or sawn.
Example 4: Business A exports natural stone products in the forms of stone
blocks and slabs. In this case, exported natural stone products are not liable
to VAT.
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Example 5: Business B exports white limestone in the forms of granule
and powder. In this case, these export products are not liable to VAT. If
business B exports super-fine stone powder (according to criteria issued by
competent agencies) and acid-coated super-fine stone powder, these
products shall be determined as processed products and therefore, are
subject to VAT at the stage of exportation.
24. Artificial products used as substitutes for diseased people’s organs,
including also those being body parts for permanent implantation in human
bodies; crutches, wheelchairs and other tools used exclusively for people
with disabilities.
25. Goods and services of business individuals with an average monthly
income lower than the common minimum salary level applicable to
domestic organizations and enterprises under the Government’s
regulations on region-based minimum salary levels applicable to
employees of companies, enterprises, cooperatives, cooperative groups,
farms, households, individuals and other Vietnamese organizations that
employ laborers.
26. The following goods and services:
a/ Goods for duty-free sale at duty-free shops under the Prime Minister’s
regulations.
b/ National reserve goods sold by the National Reserves.
c/ Services for which charges or fees are collected by the State under the
law on charges and fees.
d/ Sweeping of bombs, land mines and explosive objects performed by
defense units for state budget-funded projects.
Any change in the use purposes of goods not liable to VAT at the stage of
importation must be declared for VAT payment at the stage of importation
under regulations to customs offices with which customs declarations are
registered. Organizations and individuals that sell goods on the domestic
market shall declare and pay VAT under regulations to tax agencies
directly managing them.
Article 5. Cases not requiring VAT declaration and payment
1. Goods and services provided outside Vietnam by Vietnam-based
taxpayers, except international transportation from an overseas place to
another;
In case service provision activities are carried out both in Vietnam and
overseas, such services are subject to VAT for the contract value
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performed in Vietnam, except the provision of insurance services for
imported goods.
Example 6: Company A and Company B (both are Vietnamese enterprises)
sign a lubricant sale and purchase contract. Company A buys lubricants
from companies in Singapore and then sell them to Company B at
Singapore’s seaports. In this case, Company A does not have to declare,
calculate and pay VAT on the turnover from the sale of such lubricants.
Example 7: Company D signs with unit X, a Vietnamese state management
agency, a contract to organize an art performance in the Netherlands. In
this case, Company D does not have to declare, calculate and pay VAT on
the turnover earned from the contract.
Example 8: Company B signs with Company C a contract to provide
consultancy, exploration and design services for a Cambodia-based
investment project of Company C (both companies are Vietnamese
enterprises). In case the contractual services are provided partially in
Vietnam and partially in Cambodia, Company B does not have to declare,
calculate and pay VAT on the value of the services provided in Cambodia
but shall declare, calculate and pay VAT according to regulations on the
value of the services provided in Vietnam.
Example 9: Insurance Company Y (a Vietnamese enterprise) signs with
Limited Liability Company X a contract to provide insurance services for
Company X’s imported goods from France to its warehouse in Vietnam. In
this case, Company Y does not have to declare, calculate and pay VAT on
turnover earned from the insurance contract signed with Company X.
2. Revenues from compensation, bonus, support, transfer of the emission
right and other financial revenues, except loan interests received by
enterprises other than credit institutions.
When receiving compensation, bonus, support, transfer of the emission
right and other financial revenues, business establishments shall make
receipt documents according to regulations. Paying business
establishments shall make payment documents based on the purposes of
expenditures.
An establishment that pays compensation in goods or services shall make
an invoice as for sale of goods or services. The establishment receiving
compensation shall declare and credit VAT according to regulations.
Example 10: Joint-Stock Company VC signs a contract to provide
enterprise T a 6 month-term loan and receives an interest thereon. In this
case, Company VC shall declare and pay VAT on the amount of interest
earned from this loan contract.
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Example 11: Limited Liability Company P&C receives an interest on
purchased bonds and dividends on purchased shares of other enterprises.
In this case, Limited Liability Company P&C does not have to declare and
pay VAT on such interest and dividends.
Example 12: Enterprise B receives from enterprise B an amount of VND
50 million as compensation for contract cancellation. In this case,
enterprise A shall make a receipt document and does not have to declare
and pay VAT on that amount.
Example 13: Enterprise X purchases goods from enterprise Y. It also
advances a sum of money to enterprise Y and receives from enterprise Y
an amount of interest thereon. In this case, enterprise X does not have to
declare and pay VAT on the received interest amount.
Example 14: Enterprise X sells goods to enterprise Z at a total price of
VND 440 million. Under the signed contract, enterprise Z is allowed to
make deferred payment within 3 months and the interest rate on deferred
payment is 1% of the total contractual price. After 3 months, enterprise X
receives from enterprise Z VND 440 million, which is the total contractual
payment price, and of VND 13.2 million, which is the deferred payment
interest (VND 440 million x 1% x 3 months). In this case, enterprise X
does not have to declare and pay VAT on the amount of VND 13.2 million.
3. Vietnam-based production and business organizations and individuals
that purchase from foreign organizations without permanent
establishments in Vietnam or overseas individuals not residing in Vietnam
such services as repair of vehicles, machinery and equipment (including
supplies and spare parts); advertising and marketing; investment and trade
promotion; goods sale and service provision brokerage; training; and
shares of charges for international post or telecommunications services
provided outside Vietnam between Vietnamese and foreign partners.
4. Non-business organizations and individuals that are not VAT payers are
not required to declare and calculate VAT when selling their assets,
including cases of selling assets they are using to secure loans at banks or
credit institutions.
Example 15: Mr. A, a non-business person, sells a 4-seat car to Mr. B at
the price of VND 600 million. In this case, Mr. A does not have to declare
and pay VAT on the proceeds from the sale of his car.
Example 16. Mr. E, a non-business person, mortgages a 4-seat car to
borrow money from bank VC. As he is unable to pay his debt to bank VC
on the contractual due date, his mortgaged car is put up for compulsory
sale for debt recovery. In this case, VAT declaration and payment is not
required for the proceeds from the compulsory sale of this car.
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5. In case a fixed asset currently in use for which depreciation has been
made is transferred according to its book value between a business
establishment and a member unit in which the business establishment owns
100% of capital or between member units wholly owned by a business
establishment to serve the production or provision of VAT-liable products
or services, it is not required to make invoices and declare and pay VAT.
The business establishment having such asset shall make an asset transfer
decision or order, enclosed with a dossier on the origin of the asset.
In case an asset has been re-valuated before transfer or is transferred to an
establishment producing or providing goods or services not liable to VAT,
it is required to issue a value-added invoice and declare and pay VAT
according to regulations.
6. Other cases:
A business establishment is not required to declare and pay tax on:
a/ Assets contributed as capital to form an enterprise. Such assets must be
accompanied with a written record on the contribution of capital for
production and business; a joint-venture or association contract; an asset
valuation record made by the contributed capital delivery and receipt
council set up by capital-contributors (or a valuation document issued by a
functional organization according to law), enclosed with a dossier on the
origin of such assets;
b/ Assets transferred between its dependent cost-accounting units; assets
transferred upon its split, separation, consolidation, merger or
transformation. When transferring an asset between its dependent costaccounting units or transferring an asset upon its split, separation,
consolidation, merger or transformation, the business establishment having
such asset shall make an asset transfer order, enclosed with a set of dossier
on the origin of such asset, but does not have to issue an invoice.
For an asset transferred between its independent cost-accounting units or
member units having the legal persons status, the establishment having
such asset shall issue a value-added invoice and declare and pay tax
according to regulations, except the cases guided in Clause 5 of this
Article;
c/ Third-party claims in insurance activities;
d/ Authorized collections not related to the sale of goods and services by
the business establishment;
e/ Turnover from goods and services for which the business establishment
acts as a sale agent and agency commission for acting as a sale agent
selling goods at prices fixed by principal establishments for such services
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as posts, telecommunications, lottery tickets and air, car, train and boat
tickets; international transport agents; agents for aviation and maritime
services applicable to the VAT rate of 0%; insurance sale agents;
f/ Turnover from goods and services not liable to VAT and commissions
for acting as a sale agent of goods and services not liable to VAT.
Chapter II
TAX BASES AND TAX CALCULATION METHODS
Section 1
TAX BASES
Article 6. Tax bases
The bases for calculating VAT are taxed price and tax rate.
Article 7. Taxed prices
1. For goods and services sold by production and business establishments,
the taxed price is the selling price exclusive of VAT. For excise tax-liable
goods and services, the taxed price is the selling price inclusive of excise
tax but exclusive of VAT.
For environmental protection tax-liable goods, the taxed price is the selling
price inclusive of environmental protection tax but exclusive of VAT; for
goods and services liable to both excise tax and environmental protection
tax, the taxed price is the selling price inclusive of excise tax and
environmental protection tax but exclusive of VAT.
2. For imported goods eligible for exemption from or reduction of import
duty, the taxed price is the import price plus (+) the payable import duty
determined at the applicable duty rate after subtracting the exempted or
reduced amount.
3. For goods and services (including those purchased from outside or
produced by business establishments themselves) which are used for
barter, presentation as gifts, donation or payment of salaries, the taxed
price is that of goods or services of the same or similar type at the time
such activities are carried out.
Example 17: Establishment A, an electric fan manufacturer, barters 50 fans
with establishment B for iron and steel. The selling price (exclusive of
VAT) of a fan is VND 400,000. In this case, the taxed price is 50 x VND
400,000 = VND 20,000,000.
Particularly for letters of invitation (free-of-charge) to art performances,
fashion shows, beauty and model contests or sports competitions licensed
by competent state agencies, the taxed price is zero (0).
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Art performance organizers shall determine and take responsibility for the
number of letters of invitation and lists of organizations and individuals
that will receive letters of invitation before art performances or sports
competitions take place. Those who commit fraudulent acts by collecting
money for letters of invitation shall be handled according to the law on tax
administration.
Example 18: Joint-Stock Company X is licensed to organize the “Miss
Vietnam 20xx” contest. In addition to the quantity of tickets printed for
sale to the public, the company prints a certain number of invitation letters
for free-of-charge presentation, enclosed with a list of invited guests.
When declaring VAT, the taxed price of such letters of invitation is zero
(0). If tax agencies detect that Company X collects money for such letters
of invitation, Company X shall be handled according to the law on tax
administration.
4. Taxed prices of products, goods and services for internal consumption
For a product, goods or service delivered or provided by a business
establishment for consumption to serve its business activities (internal
consumption), the taxed price is that of the same or similar product, goods
or service at the time of consumption. The business establishment may
declare and credit VAT amounts for value-added invoices issued for
products, goods or services delivered for internal consumption to serve the
production or provision of VAT-liable goods or services.
For goods which are transferred within a production or business
establishment such as goods transferred within the business’s warehousing
system or ex-warehoused as supplies or semi-finished products for further
manufacture, VAT calculation and payment are not required.
Example 19: Unit A, an electric fan manufacturer, installs 50 fans, which
are its products, in its production workshops. The selling price (exclusive
of VAT) of a fan of this kind is VND 1,000,000 and the applicable VAT
rate is 10%.
The taxed price is VND 1,000,000 x 50 = VND 50,000,000
Unit A shall issue an added-value invoice indicating the taxed price of
VND 50,000,000 and the VAT amount of VND 5,000,000. Unit A may
declare and credit VAT for this invoice.
Example 20: Garment producer B has a yarn workshop and a sewing
workshop. If it transfers finished yarn from the yarn workshop to the
sewing workshop for further use in the production process, it is not
required to calculate and pay VAT for the quantity of yarn delivered to the
sewing workshop.
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Particularly, business establishments that use internally consumed goods
and services for production and business activities for which output VAT
calculation is not required, such as transportation, aviation, railway, post
and telecommunications, shall issue a document to specify internally
consumed goods and services and their consumption limits according to
their competence.
5. For property lease services such as leasing houses, offices, workshops,
warehouses, wharves, yards, means of transport, machinery, equipment,
etc., the taxed price is the VAT-exclusive rent.
In case of leasing with rent paid in installments or prepaid for a leasing
term, the taxed price is the rent amount paid in installments or prepaid for
the leasing term, exclusive of VAT.
In case of leasing foreign-made machinery, equipment or means of
transport which cannot be manufactured at home for sub-lease, the taxed
price is exclusive of the rent payable to the foreign party.
Applicable rent rates are those agreed upon by involved parties in their
contracts. When a rent rate bracket is prescribed by law, rent rates must be
within that bracket.
6. For goods sold on installment or deferred payment, the taxed price is the
lump-sum VAT-exclusive selling price, excluding interests on installment
or deferred payments.
Example 21: A motorbike trading company sells 100-cc motorbikes of X
brand. The VAT-exclusive selling price of a motorbike is VND 25.5
million (including an installment interest of VND 0.5 million). In this case,
the taxed price is VND 25 million.
7. For goods processing, the taxed price is the VAT-exclusive processing
price under the processing contract, consisting of remuneration, costs of
fuel, power, auxiliary materials and other expenses for the processing
operation.
8. For construction and installation, the taxed price is the VAT-exclusive
value of the completed and handed over work, work item or job.
a/ For cases of construction and installation involving contracted supply of
materials, the taxed price is the construction and installation price,
inclusive of the VAT-exclusive value of materials.
Example 22: Construction company B enters into a work construction
contract, covering also the value of construction materials. The VATexclusive total payment value is VND 1.5 billion, of which the VAT-
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exclusive value of construction materials is VND 1 billion. Then the taxed
price is VND 1.5 billion.
b/ For cases of construction and installation without contracted supply of
materials, the taxed price is the construction and installation value
exclusive of the VAT-exclusive value of materials.
Example 23: Construction company B enters into a work construction
contract not covering the value of construction materials. If the total VATexclusive value of the work is VND 1.5 billion and the VAT-exclusive
value of construction materials supplied by investor A is VND 1 billion,
then the taxed price in this case is VND 500 million (VND 1,500 million VND 1,000 million).
c/ For construction and installation with payments to be made for each
completed and taken-over construction item or based on the value of the
completed and taken-over construction and installation volume, the taxed
price is the VAT-exclusive value of the completed and taken-over
construction item or work volume.
Example 24: Textile company X (party A) hires construction company Y
(party B) to perform construction and installation work to expand a
workshop.
The total VAT-exclusive value of the work is VND 200 billion, including:
- The construction and installation value: VND 80 billion
- The value of equipment supplied and installed by party B: VND 120
billion.
- VAT amount 10%: (80 + 120) x 10% = VND 20 billion.
- Total amount payable by party A: VND 220 billion:
- Party A shall:
+ Take over the workshop, account it as an increase of VND 200 billion
(VAT-exclusive value) in the value of its fixed assets for depreciation
calculation.
+ Declare and credit the VAT amount of VND 20 billion against the output
VAT on goods sold, or request tax refund under regulations.
If party A tests, takes over the work and accepts to make payment to party
B per construction item (presuming that a VND 80 billion-construction and
installation volume is tested, taken over and paid for first) then the taxed
price is VND 80 billion.
9. For real estate trading, the taxed price is the real estate transfer price
minus (-) the land price allowed to be subtracted when determining VAT.
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a/ The land price allowed to be subtracted when determining VAT is
specified as follows:
a.1/ For land allocated by the State for building infrastructure or houses for
sale, the land price allowed to be subtracted when determining VAT
includes the land use levy to be paid into the state budget (exclusive of
exempted or reduced land use levy amounts) and expenses for
compensation and ground clearance according to law;
Example 25: In 2011, real estate company A is allocated land by the State
to build infrastructure and houses for sale. The payable land use levy
(exclusive of exempted or reduced land use levy amounts and expenses for
compensation and ground clearance according to the approved plan) is
VND 30 billion. The project is entitled to a 20% reduction of the payable
land use levy amount. The expense for compensation and ground clearance
under the approved plan is VND 15 billion.
The total value of land to be subtracted is determined as follows:
- The exempted or reduced land use levy amount: VND 30 billion x 20% =
VND 6 billion;
- The land use levy amount to be paid into the state budget (exclusive of
the exempted or reduced land use levy amount): VND 30 billion - 6 billion
- 15 billion = 9 billion.
- The total land price allowed to be subtracted when calculating VAT,
inclusive of the land use levy to be paid into the state budget (exclusive of
the exempted or reduced land use levy amount) and the expense for
compensation and ground clearance), is: VND 9 billion + 15 billion = 24
billion. The total land price allowed to be subtracted shall be allocated to
the number of square meter allowed for sale.
a.2/ In case of land use right auction, the land price allowed to be
subtracted when determining VAT is the successfully bid land price;
a.3/ In case of leasing land for building infrastructure or houses for sale,
the land price allowed to be subtracted when determining VAT is the land
rent to be paid into the state budget (exclusive of the exempted or reduced
land rent amount) plus the expense for compensation and ground clearance
according to law.
a.4/ In case a business establishment receives land use rights transferred
from an organization or individual, the land price allowed to be subtracted
when determining VAT is the land price at the time of transfer, inclusive
the value of infrastructure (if any). The business establishment may not
declare and credit input VAT of infrastructure already included in the nontaxable subtracted value of land use rights. If the land price at the time of
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transfer cannot be determined, the land price allowed to be subtracted
when determining VAT is the land price set by the provincial-level
People’s Committee at the time of signing the transfer contract.
Example 26: In July 2011, Company A received the right to use a land plot
of 200 m2 transferred from Mr. B at the price of VND 6 billion. Company
A has signed a land use right transfer contract and has it notarized
according to the land law and has sufficient documents evidencing the
payment of VND 6 billion to Mr. B. Company A has built no work in this
land plot. In September 2012, Company A transfers the land use rights
purchased from Mr. B at the price of VND 9 billion, the land price allowed
to be subtracted when determining VAT is the transfer price (VND 6
billion).
Example 27: In November 2011, Limited Liability Company A received
the right to use a land plot of 300 m2 transferred from Mr. B at the price of
VND 10 billion but documents evidencing the land price at the time of
transfer were unavailable. In April 2012, Company A transfers this land
plot at the price of VND 14 billion, the land price allowed to be subtracted
when determining VAT is the land price set by the concerned provinciallevel People’s Committee at the time of transfer (November 2011).
Example 28: In September 2011, Company B purchased from real estate
trading A a 2,000-m2 land plot with infrastructure at a total price of VND
62 billion (the non-taxable land price is VND 40 billion, with VND 20
million per square meter).
Company A shall write in the invoice:
- VAT-exclusive transfer price: VND 60 billion
- Non-taxable land price: VND 40 billion
- VAT on infrastructure: VND 2 billion
- Total payment price: VND 62 billion
Company A shall declare the payable VAT amount as follows:
Payable VAT amount = Output VAT amount - Creditable input VAT
amount
Supposing that the input VAT of VND 1.5 billion on infrastructure
construction is eligible for credit:
The payable VAT amount = VND 2 billion - 1.5 billion = 0.5 billion
Company B further builds infrastructure and 10 villas (each with a floor
area of 200 m2) for sale. The total input VAT for construction of these
villas is VND 3 billion.
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On April 1, 2012, Company B signs a contract to sell 1 villa to customer C
at the VAT-exclusive price of VND 10 billion. The land price to be
subtracted when determining the taxed price of the sold villa is:
- The value of land use rights for the villa (exclusive of the value of
infrastructure) at the time of receiving land use rights transferred from
Company A: (VND 20 million x 200 m2 = VND 4 billion).
- The value of infrastructure allocated to a villa:
(VND 20 billion : 200 m2) x 200 m2 = VND 2 billion
- The value of land use rights (inclusive of the value of infrastructure) at
the time of receiving land use rights transferred from Company A to be
subtracted when determining the taxed price of the sold villas is VND 6
billion.
Company B shall write in the invoice:
- Transfer price of a villa: VND 10 billion
- Non-taxable land price allowed to be subtracted: VND 6 billion
- VAT amount: VND 0.4 billion [(VND 10 billion - 6 billion) x 10%]
- Total payment price: VND 10.4 billion
Supposing that Company B sold out 10 villas in the month. It will declare
and pay a payable VAT amount = output VAT amount - creditable input
VAT = VND 0.4 billion x 10 villas - VND 3 billion = VND 1 billion.
The VAT amount of VND 2 billion on the value of infrastructure indicated
on the invoice on the receipt of land use rights transferred from Company
A is not allowed for declaration and credit.
a.5/ For real estate establishments doing business in the form of buildtransfer (BT) and exchanging works for land, the land price to be
subtracted when determining VAT is the price set under law at the time of
signing BT contracts.
b/ In case of infrastructure construction and commercial operation, or
construction of houses for sale, transfer or lease, the taxed price is the sum
earned according to the project implementation schedule or payment
schedule indicated in contracts.
10. For goods and service sale and purchase agency and brokerage
activities, remunerated or commissioned import or export entrustment
activities, the taxed price is VAT-exclusive remunerations or commissions
earned from these activities.
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11. For goods and services with payment vouchers showing VAT-inclusive
payment prices, such as stamps, freight or fare tickets or lottery tickets,
their VAT-exclusive prices shall be determined as follows:
VAT-exclusive
price
=
Payment price (ticket or stamp price)
1 + VAT rate applicable to the goods or service (%)
12. For electricity supplied by a hydropower plant being a dependent costaccounting unit of the Electricity of Vietnam Group, the taxed price for
determining the payable VAT amount in the locality where such plant is
located is equal to 60% of the VAT-exclusive average commercial
electricity sale price in the previous year. In case the average commercial
electricity sale price in the previous year cannot be determined, a price for
temporary VAT calculation announced by the Group may apply but must
not be lower than the price of the previous year. When the average
commercial electricity sale price in the previous year can be determined,
declaration for difference adjustment shall be made in the declaration
period of the month when the official price is available. The average
commercial electricity sale price in a year must be determined before
March 31 of the following year.
13. For casino, prized video game or betting game services, the taxed price
is the excise tax-inclusive sums of money earned from these activities
minus prizes paid to customers.
The taxed price is calculated according to the following formula:
Taxed price
=
Earned sum of money
1 + tax rate
Example 29: In a tax period, a casino service establishment records the
following figures:
- Cash amount collected from customers for token exchange at counters
before playing games: VND 43 billion.
- Cash amount paid to customers for tokens returned after playing games:
VND 10 billion.
Cash amount actually collected by the establishment: VND 43 billion VND 10 billion = VND 33 billion.
The cash amount of VND 33 billion is the establishment’s turnover
inclusive of VAT and excise tax.
The taxed price is calculated as follows:
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22
Taxed price
=
VND 33 billion
=
1 + 10%
VND 30 billion
14. For transportation, loading and unloading, the taxed price is VATexclusive freight or loading and unloading charge rate, regardless of
whether establishments directly undertake the transportation, loading and
unloading or outsource such services.
15. For tourist services in the form of tours under contracts signed with
tourists at a package price (inclusive of meals, accommodation and
transportation, this package price is regarded as the VAT-inclusive price.
The taxed price is determined according to the following formula:
Taxed price
=
Package price
1 + tax rate
In case the package price covers also inbound and outbound air fares,
expenses for meals, accommodation and sight-seeing and some other
expenses incurred abroad (provided that they are accompanied with lawful
vouchers), the sum of money collected from tourists to cover these
expenses may be subtracted from the taxed price (turnover).
Example 30: Ho Chi Minh City Tourist Company performs a package tour
contract with Thailand for 50 tourists for five days in Vietnam with a total
payment of USD 32,000. The Vietnamese side has to pay for airfares,
meals, accommodation, and sight-seeing tours under the agreed program,
of which the airfares from Thailand to Vietnam and vice versa cost USD
10,000. The applicable exchange rate is USD 1 = VND 20,000.
The taxed price under this contract is determined as follows:
+ Turnover liable to VAT is:
(USD 32,000 - USD 10,000) x VND 20,000 = VND 440,000,000
+ The taxed price is:
VND 440,000,000
1 + 10%
=
VND 400,000,000
Example 31: Hanoi Tourist Company performs a contract for taking
tourists from Vietnam to China on a five-day tour at the package price of
USD 400/person. If it has to pay a Chinese tourist company USD
300/person, its taxed price (turnover) is USD 100/person (USD 400 - USD
300).
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16. For pawning service, the taxed price is the amount to be collected from
this service, including the interest receivable from pawn loans and other
proceeds from the sale of pawned articles (if any).
The taxed price is determined according to the following formula:
Taxed price
Receivable amount
=
1 + tax rate
Example 32: A pawning company generates in the tax period a pawning
turnover of VND 110 million.
+ The taxed price is determined as follows:
VND 110 million
1 + 10%
=
VND 100 million
17. For a VAT-liable book sold at the distribution price (cover price) under
the Publication Law, this sale price shall be determined as the VATinclusive price for calculating VAT and turnover of the seller. For a book
sold at a price other than the cover price, VAT shall be calculated on the
basis of the actual sale price.
18. For printing activities, the taxed price is the printing cost. If a printing
establishment performs printing contracts with payment prices covering
also printing and paper costs, the taxed price also includes the paper cost.
19. For services of assessment agency, agency for indemnity consideration,
agency for third-party claim and agency for handling of wholly
compensated goods for remunerations or commissions, the taxed price is
the earned VAT-exclusive remuneration or commission amount (not yet
subtracted with any expenses) collected by insurance enterprises.
20. The taxed price of services provided both in Vietnam and overseas is
the value of services provided in Vietnam as indicated in the service
provision contract. If the value of services provided in Vietnam is not
separately indicated in the contract, the taxed price shall be determined
according to the ratio (%) of expenses arising in Vietnam to total expenses.
Example 33: Joint-stock Company B provides to Center X a seminar and
study tour service which is divided into 2 parts: holding a seminar in
Vietnam and organizing a study tour in Thailand. The whole value of the
service under the signed contract is VND 500 million, of which the value
of the service of organizing a seminar in Vietnam is VND 150 million, air
fares from Thailand to Vietnam (and vice versa) and expenses for meals,
accommodation and the study tour in Vietnam under the program is VND
350 million.
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The taxed price shall be determined to be equal to (=) the VAT-inclusive
value of the service provided in Vietnam (1+VAT rate). Specifically, the
taxed price is determined as follows:
VND 150 million
1 + 10%
=
VND 136,363,640
Example 34: Company D provides the service of consultancy, exploration
and making a feasibility study report for a Lao-based investment project of
Company X. The total VAT-exclusive turnover earned by Company D is
VND 5 billion. The contract signed between the two enterprises does not
indicate the turnover earned in Vietnam and that earned in Laos. Company
D calculates expenses arising in Laos (survey and exploration expenses) as
VND 1.5 billion and expenses arising in Vietnam (summarization and
making of the report) as VND 2.5 billion.
Taxed price
=
VND 5 billion
x
VND 2.5 billion
VND 2.5 billion + 1.5 billion
21. For cases of purchasing the services specified in Clause 5, Article 3 of
this Circular, the taxed price is the VAT-exclusive payment price indicated
in the service sale/purchase contract.
22. The taxed price of goods and services specified in Clauses 1 thru 21 of
this Article covers also revenues and surcharges collected by business
establishments in addition to goods and service prices.
In case a business establishment offers a price or commercial discount for
customers, the taxed price is the reduced or discounted price. In case the
price reduction or commercial discount is based on the quantity and sales
of goods or services, the reduced or discounted amount of goods sold shall
be adjusted on the goods and service sale invoice upon the last purchase or
in the subsequent period. In case the reduced or discounted amount is
recorded when the price reduction or discount program (period) ends, the
establishment may issue an adjustment invoice, enclosed with a list of
serial numbers of invoices which need to be adjusted, the adjusted amounts
and tax amounts. Based on the adjustment invoice, the seller and buyer
shall declare adjustments to sale and purchase turnovers and input and
output tax.
Taxed prices are calculated in Vietnam dong. In case a taxpayer has
foreign-currency turnover, such turnover must be converted into Vietnam
dong at the average inter-bank exchange rate announced by the State Bank
of Vietnam at the time of turnover generation.
Article 8. Time of VAT determination
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1. For sale of goods, it is the time of transfer of the right to own or use
goods to the purchaser, regardless of whether money has been collected.
2. For provision of services, it is the time of completing service provision
or the time of making a service provision invoice, regardless of whether
money has been collected.
3. For supply of electricity and clean water, it is the date of recording water
or electricity meter readings for water or electricity billing.
4. For real estate trading, building of infrastructure or houses for sale,
transfer or lease, it is the time of collection of money according to the
project implementation or payment collection schedule stated in the
contract. Based on the collected sum of money, the business establishment
shall declare the output VAT amount arising in the period.
5. For construction and installation, it is the time of takeover test and
handover of the completed work, work item, construction or installation
volumes, regardless of whether money has been collected.
6. For imported goods, it is the time of registration of the customs
declaration.
Article 9. Tax rate of 0%
1. The 0% tax rate applies to exported goods and services; work
construction and installation for export processing enterprises;
international transportation; goods and services not liable to VAT upon
exportation, except cases ineligible for the 0% tax rate under Clause 3 of
this Article.
a/ Exported goods include:
- Goods exported abroad, including entrusted export;
- Goods sold into non-tariff zones under the Prime Minister’s decisions;
goods sold to duty-free shops;
- Cases regarded as export under law:
+ Intermediary processed goods under the commercial law regarding
international goods trading and goods trading and processing agency with
foreign parties.
+ On-spot exports under law.
+ Goods exported for sale at overseas fairs and exhibitions.
b/ Exported services include services provided directly to overseas
organizations or individuals or organizations or individuals in non-tariff
zones.
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Overseas organizations are foreign organizations without permanent
establishments in Vietnam and are not VAT payers in Vietnam;
Overseas individuals are non-resident foreigners and overseas Vietnamese
not present in Vietnam during the provision of services;
Organizations and individuals in non-tariff zones are those with business
registration certificates and other cases specified by the Prime Minister.
c/ International transportation provided in this Clause covers transportation
of passengers, luggage and cargo on international routes from Vietnam to
overseas or vice versa or from an overseas place to another, regardless of
having means of transport or not. In case a contract on international
transportation covers domestic routes, international transportation also
covers such domestic routes.
Example 35: Transportation Company X in Vietnam, which has ships for
international transportation, transports cargo from Singapore to South
Korea. Revenues from such transportation are those from international
transportation.
d/ Aviation and maritime services provided directly to overseas
organizations or through agents, including:
Aviation services eligible for the 0% tax rate: provision of in-flight meals;
takeoff and landing; apron; aircraft security and protection; security
screening of passengers, luggage and cargo; luggage conveyors in airport
terminals; ground technical and commercial services; aircraft protection;
aircraft pushback and towing; aircraft piloting; aerobridge lease; flight
operations; transportation of flight crews, stewards and passengers within
aprons; cargo loading and tally; passenger service for international flights
from Vietnamese airports.
Maritime services eligible for the 0% tax rate: seagoing ship towing;
maritime piloting; maritime salvage; piers and floating wharves; loading
and unloading; mooring and unmooring; opening and closing of hatch
covers; cargo hold cleaning; tally and forwarding; and registration.
e/ Other goods and services:
- Work construction and installation for export processing enterprises;
- Goods and services not liable to VAT upon exportation, except cases
ineligible for the 0% tax rate provided in Clause 3 of this Article;
- Repair of aircraft and seagoing ships for foreign organizations and
individuals.
2. Conditions on application of the 0% tax rate:
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a/ For exported goods:
- Having a contract on sale or processing of exported goods; or contract on
entrusted export;
- Having vouchers of via-bank payment for exported goods, and other
documents under law;
- Having customs declarations under Clause 2, Article 16 of this Circular.
b/ For exported services:
- Having a contract on service provision with an overseas organization or
individual or an organization or individual in a non-tariff zone;
- Having documents of via-bank payment for exported services and other
documents under law;
- Having a commitment of the overseas organization that it neither has a
permanent establishment in Vietnam nor is a VAT payer in Vietnam; a
commitment of the overseas person that he/she is a non-resident foreigner
or overseas Vietnamese and stays outside Vietnam during the service
provision.
Particularly for aircraft and seagoing ship repair services provided to
foreign organizations and individuals, to be eligible for the tax rate of 0%,
aircraft and seagoing ships must, apart from meeting the above conditions
on contract and payment documents, go through import procedures upon
their entry into Vietnam and export procedures upon completion of repair.
c/ For international transportation:
- Having a lawful contract on carriage of passengers, luggage and cargo
between the carrier and carriage lessee along international routes from
Vietnam to abroad or vice versa or from one to another overseas location.
For carriage of passengers, the carriage contract is the ticket. International
transportation businesses shall comply with regulations on transportation.
- Having documents on via-bank payment or other modes of payment
regarded as via-bank payment. Having documents on direct payment, for
carriage of individual passengers.
d/ For aviation and maritime services:
d.1/ The 0% tax rate applies to aviation services at international airports
and airfields and international air cargo terminals which satisfy the
following conditions:
- Having a service provision contract with, or a service provision request
by, an overseas organization or a foreign airline;
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- Having documents on via-bank payment or other modes of payment
regarded as via-bank payment. For provision of services to an overseasbased organization or a foreign airline on an irregular, unscheduled and
uncontractual basis, having documents on direct payment of such
organization or airline.
The above conditions on contracts and payment documents do not apply to
the provision of services to passengers on international flights departing
from Vietnamese airports.
d.2/ The 0% tax rate applies to maritime services at seaports which satisfy
the following conditions:
- Having a service provision contract with, or a service provision request
by, an overseas organization or a shipping agent;
- Having vouchers of via-bank payment of an overseas organization or a
shipping agent, or other modes of payment regarded as via-bank payment.
3. Cases ineligible for the 0% tax rate:
- Offshore re-insurance; offshore transfer of technologies or intellectual
property rights; offshore capital transfer, credit extension or securities
investment; derivative financial services; outbound post and
telecommunications services (including also post and telecommunications
services provided to organizations and individuals in non-tariff zones and
provision of prepaid mobile phone cards with codes and par value overseas
or in non-tariff zones); exported products being unprocessed natural
resources or minerals; goods and services provided to individuals without
business registration in non-tariff zones, except other cases provided by the
Prime Minister;
- Petrol and oil sold domestically to automobiles of businesses in non-tariff
zones;
- Automobiles sold to organizations and individuals in non-tariff zones;
- Services provided by businesses to organizations and individuals in nontariff zones, including lease of housing, workshops, halls, offices, hotels
and warehouses and storage yards; transportation of employees; catering
services (except the provision of industrial meals and catering services in
non-tariff zones);
- The following services provided in Vietnam to overseas organizations
and individuals are ineligible for the 0% tax rate:
+ Sports competitions, art, cultural and recreational performances,
conferences, hotels, training, advertising and travel;
+ Online payment, digitalized service.
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The cases ineligible for the 0% tax rate provided in this Clause are subject
to the corresponding tax rates applicable to goods and services sold or
provided domestically.
Article 10. Tax rate of 5%
1. Clean water for production and daily life, excluding bottled drinking
water and other beverages subject to the tax rate of 10%.
2. Fertilizers; ores for fertilizer production; pesticides and plant and animal
growth stimulants.
a/ Fertilizers are organic and inorganic fertilizers such as phosphorus
fertilizer, nitrate fertilizer (urea), NPK, mixed nitrate, phosphate,
potassium; vermicompost and other fertilizers.
b/ Ores for fertilizer production are those used as materials for fertilizer
production such as apatite for phosphorus fertilizer production, humus for
vermicompost production.
c/ Pesticides and animal and plant growth stimulants.
3. Feeds for cattle, poultry and other domestic animals, including
processed and unprocessed products, such as bran, offal, assorted oil
cakes, fish meal, bone meal, shrimp meal and other feeds for cattle, poultry
and domestic animals.
4. Services of digging, embanking and dredging canals, ditches, ponds and
lakes for agricultural production; cultivating and tending plants and
preventing and eliminating pests; and preliminarily processing and
preserving agricultural products (except dredging intra-field canals and
ditches specified at Clause 3, Article 4 of this Circular).
Services of preliminary processing and preservation of agricultural
products, including sun-drying, heat-drying, peeling, pitting, slicing,
grinding, freezing, salting and other ordinary methods of preservation.
5. Cultivation, husbandry, aquatic and marine products which are
unprocessed or preliminarily processed by cleaning, sun-drying, heatdrying, peeling, pitting, slicing, grinding, freezing, salting or other
ordinary methods of preservation at the trading stage.
Unprocessed cultivation products guided at this Point include also paddy,
rice, maize, potato, cassava and wheat.
6. Preliminarily processed latex in the forms of crepe, sheet, strip or
granule; preliminarily processed pine resin; nets, net ropes and cords for
weaving fishing nets, including fishing nets, assorted cords and ropes for
exclusive use in weaving fishing nets, regardless of their production
materials.
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7. Fresh and raw foods; forest products, except timber, bamboo shoots and
the products specified in Clause 1, Article 4 of this Circular, not yet
processed at the trading stage.
Fresh and raw foods are those which have been neither cooked nor
processed into other products, but have only been preliminarily processed
by cleaning, peeling, slicing, freezing or sun-drying, and still remain fresh
and raw, such as cattle and poultry meat, shrimps, crabs, fishes, and other
aquatic and marine products. Seasoned food is subject to the 10% tax rate.
Unprocessed forest products are forest products exploited from natural
forests and of the groups of bamboo and rattan of various kinds,
mushrooms, Jew’s ear fungus; roots, leaves, flowers, medicinal plants,
plant resins, and other forest products.
Example 36: Limited Liability Company A produces seasoned fresh bo
catfish (pseudobagrus) by the process: catching live fish; slicing fish into
fillet; seasoning fillets with sugar, salt and solpitol; packing and freezing.
In this case, the seasoned fresh bo catfish is ineligible for the 5% tax rate,
but is subject to the 10% tax rate.
8. Sugar and by-products in sugar production, including molasses, bagasse,
dregs.
9. Products made of jute, rush, bamboo, rattan, leaves, straw, coir, coconut
shells, water hyacinth, and other handicraft products made of raw materials
from agricultural production are those made of or processed from jute,
rush, bamboo, rattan and leaves as main raw materials, such as jute carpets,
jute yarns, jute bags, coir carpets, jute or rush mats, brooms, ropes and
strings made of bamboo or coir; curtains and blinds made of bamboo of
various kinds, bamboo brooms, conical hats; bamboo chopsticks;
preliminarily processed cotton; newsprint paper.
10. Specialized machinery and equipment for agricultural production,
including plowing, harrowing, seedling-transplanting and seed-sowing
machines, rice threshers, harvesters, combined harvester-threshers, farm
produce harvesters, pesticide sprayers or spraying machines.
11. Medical equipment and instruments, including specialized machinery
and instruments for medical use, such as scanners and radiography
machines of all kinds for medical examination and treatment; devices and
instruments used exclusively in surgery and wound treatment; ambulances;
blood-pressure, cardiac and vascular meters; blood transfusion
instruments; syringes and needles; contraceptive devices and other
specialized medical equipment;
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Medical cotton, bandages, gauzes and medical hygienic bandages;
preventive and curative medicaments, including finished medicaments,
materials for manufacture of medicaments other than functional food;
vaccines, medical biologicals, distilled water for preparation of injections
and transfusion fluids; chemical supplies for testing and germicides for
medical use; surgical caps, clothes, masks, cloths, gloves and boots, shoe
covers and tissues and gloves for medical use.
12. Teaching and learning aids, including models, drawings, writing
boards, chalks, rulers, compasses and other equipment and devices used
for teaching and scientific research and experiment.
13. Cultural, exhibition, physical training and sports activities; art
performances; film production; film import, distribution and screening.
a/ Cultural, exhibition, physical training and sports activities, except
revenues such as sales of goods, rents of grounds and fields or booths at
trade fairs or exhibitions.
b/ Art performance activities, such as tuong (classical drama), cheo
(traditional operetta), cai luong (reformed drama), singing, dancing, music,
drama, circus; other art performances and services of organizing art
performances of theatres or tuong, cheo, cai luong, singing, dancing,
music, drama or circus troupes licensed by competent state agencies.
c/ Film production; film import, distribution and screening, except for the
products specified in Clause 15, Article 4 of this Circular.
14. Children’s toys; books of various kinds, excluding those not liable to
VAT specified in Clause 15, Article 4 of this Circular.
15. Scientific and technological services are activities serving scientific
research and technological development; activities related to intellectual
property; services on information, popularization and application of
scientific and technological knowledge and practical experience under
scientific and technological service contracts provided in the Law on
Science and Technology, excluding games online and entertainment
services on the Internet.
Article 11. Tax rate of 10%
The 10% tax rate applies to goods and services not specified in Articles 4,
9 and 10 of this Circular.
The VAT rates specified in Articles 10 and 11 apply uniformly to each
type of goods or services at the stages of importation, manufacture,
processing and trading.
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Example 37: If garments are subject to the tax rate of 10%, they are subject
to this tax rate at all the stages of importation, production, processing and
trading.
Scraps and defective products recovered for recycling and reuse, when
being sold, are subject to the VAT rate applicable to corresponding goods
items.
Example 38: Fish remains, which are waste recovered from fish sauce
making, are subject to the tax rate applicable to fish remains upon sale. If
fish remains are used to produce animal feeds or fertilizers or as materials
for fertilizer production, they are subject to the 5% tax rate upon sale.
An establishment that trades in different goods or provides different
services subject to different VAT rates shall declare VAT at the VAT rate
applicable to each type of goods or services. If unable to do so, it shall
calculate and pay tax at the highest tax rate applicable to the goods or
services it manufactures, trades in or provides.
In the course of implementation, if there arises any case involving the
application of a VAT rate according to the Preferential Import Tariff which
is unconformable to this Circular, this Circular applies. For cases involving
the application of different VAT rates to the same type of imported and
domestic goods, local tax offices and customs offices shall report them to
the Ministry of Finance for timely guidance on uniform application.
Section 2
TAX CALCULATION METHODS
Article 12. Tax credit method
1. The tax credit method applies to businesses that fully observe
accounting, invoice and document regimes under the law on accounting,
invoices and documents, and register to pay tax by the tax credit method,
except those applying the method of tax calculation directly based on
added value specified in Article 13 of this Circular.
2. Determination of payable VAT amount:
Payable
amount
VAT
=
Output VAT amount -
Creditable
VAT amount
input
In which:
a/ The output VAT amount equals the total VAT amount of goods or
services indicated on a value-added invoice.
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The VAT amount indicated on a value-added invoice equals the taxed
price of the taxable goods or service sold multiplied by (x) the VAT rate
applicable to such goods or service.
In case of using vouchers indicating a VAT-inclusive price, the output
VAT amount shall be determined to be equal to this price minus (-) the
taxed price specified in Clause 11, Article 7 of this Circular.
Businesses paying VAT calculated by the tax credit method shall, when
selling goods or providing services, calculate and pay VAT on the goods
sold or services provided. On invoices issued for the sale of goods or
provision of services, businesses shall write VAT-exclusive sale prices,
VAT amounts and total amounts payable by purchasers. If an invoice only
indicates the payment price (except cases in which special-type documents
may be used) without indicating the VAT-exclusive price and VAT
amount, the VAT amount on the goods or service shall be calculated based
on the payment price indicated on the invoice or document.
Example 39: An enterprise sells iron and steel at a VAT-exclusive price of
VND 11,000,000/ton of f6 iron rods; the 10% VAT amount is VND
1,100,000/ton, but on some of its sale invoices, only the sale price of VND
12,100,000/ton is indicated, the VAT amount calculated on the basis of
sales shall be determined as follows: VND 12,100,000/ton x 10% = VND
1,210,000/ton, instead of calculation based on the VAT-exclusive price of
VND 11,000,000/ton.
Businesses shall observe the accounting, invoice and document regimes
under the law on accounting, invoices and documents. For wrong VAT
rates indicated on invoices which are not yet adjusted by businesses
themselves but are detected through inspection by tax offices, they shall be
handled as follows:
For businesses selling goods or providing services: If the VAT rate
indicated on an invoice is higher than that prescribed in legal documents
on VAT, VAT shall be declared and paid at the rate indicated on the
invoice. If the VAT rate indicated on the invoice is lower than that
prescribed in legal documents on VAT, VAT shall be declared and paid at
the rate prescribed in legal documents on VAT.
b/ The input VAT amount equals (=) the total VAT amount indicated on
the value-added invoice for purchased goods or services (including also
fixed assets) used for the production of and trading in VAT-liable goods or
services or the VAT amount indicated on the duty payment vouchers for
imported goods or the voucher of VAT payment for foreign parties under
the Finance Ministry’s guidance applicable to foreign organizations
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without the Vietnamese legal entity status and foreigners doing business or
earning incomes in Vietnam.
If purchased goods or services are those for which special-type documents
indicating VAT-inclusive payment prices are used, businesses may base
themselves on these VAT-inclusive prices and the calculation method
specified in Clause 11, Article 7 of this Circular to determine the VATexclusive price and input VAT amount.
The creditable input VAT amount shall be determined based on the VAT
credit principles provided in Articles 14, 15, 16 and 17 of this Circular.
Example 40: In a tax period, Company A made payment for input services
of a special type eligible for tax credit:
The total payment price is VND 110 million (inclusive of VAT). This
service is subject to the tax rate of 10%. The creditable input VAT amount
shall be calculated as follows:
VND 110 million
1 + 10%
x
10%
=
VND 10 million
The VAT-exclusive price is VND 100 million and the VAT amount is
VND 10 million.
Wrong VAT rates indicated on invoices which are not yet adjusted by
businesses themselves but are detected through inspection by tax offices
shall be handled as follows:
For businesses purchasing goods or services: If the VAT rate indicated on
an invoice is higher than that prescribed in legal documents on VAT, the
input VAT shall be credited at the rate prescribed in these legal documents.
If the seller is determined as having declared and paid tax at the rate
indicated on the invoice, the input VAT may be credited at the rate
indicated on the invoice, provided certification by the tax office directly
managing the seller is available. If the VAT rate indicated on an invoice is
lower than that prescribed in legal documents on VAT, the input VAT
shall be credited at the rate indicated on the invoice.
Article 13. Method of VAT calculation directly based on added value
1. The method of VAT calculation directly based on added value applies
to:
a/ Business individuals and households that fail to observe or fail to fully
observe the accounting, invoice and document regimes prescribed by law.
b/ Foreign organizations and individuals that conduct business in Vietnam
not under the Investment Law and other organizations (including also
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economic organizations of political organizations, socio-political
organizations, social organizations, socio-professional organizations,
people’s armed forces units, non-business organizations and other
organizations) that fail to observe or fail to fully observe the accounting,
invoice and document regimes prescribed by law, except foreign
organizations and individuals providing goods and services for oil and gas
search, exploration, development and exploitation.
For foreign organizations and individuals providing goods and services for
oil and gas search, exploration, development and exploitation, Vietnamese
parties shall credit and pay taxes for them at the rates set by the Ministry of
Finance. If foreign organizations and individuals register, declare and pay
tax by the tax credit method, the tax amounts already paid at the rates set
by the Ministry of Finance may be deducted from the payable tax amounts.
c/ Entities trading in gold, silver and gems.
Businesses engaged in both trading in and fashioning gold, silver and gems
are subject to the method of tax calculation directly based on added value.
2. Determination of payable VAT amounts
The payable VAT amount calculated directly based on added value equals
the added value of the taxable goods or service multiplied by (x) the VAT
rate applicable to that goods or service.
a/ The added value of a goods or service equals the payment price of the
sold goods or service minus (-) the payment price of the corresponding
purchased goods or service.
The payment price of a sold goods or service is the actual sale price
indicated in the goods or service sale invoice, which is inclusive of VAT
and surcharges and charges enjoyable by the seller, regardless of whether
the money has been collected.
The payment price of a purchased goods or service equals the VATinclusive value of the purchased or imported goods or service used for the
production of or trading in the corresponding VAT-liable goods or service
sold.
For some business lines, added value shall be determined as follows:
- For production and business activities, it is the difference between sales
and costs of purchased supplies, goods and services used in production and
business. When businesses cannot account the costs of purchased supplies,
goods and services corresponding to the sales of goods, the added value
shall be determined as follows:
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The cost of goods sold equals (=) sales left at the beginning of the period
plus (+) purchase costs in the period minus (-) sales left at the end of the
period.
Example 41: Establishment A produces wood articles. In a month, it sells
150 products and earns total sales of VND 25 million.
The value of supplies and materials purchased for the production of these
150 products is VND 19 million, including:
+ Principal raw material (timber): VND 14 million.
+ Other materials and services purchased from outside: VND 5 million.
The applicable VAT rate is 10%. The VAT amount payable by
establishment A shall be calculated as follows:
+ The added value of the sold products:
VND 25 million - VND 19 million = VND 6 million.
+ The payable VAT amount:
VND 6 million x 10% = VND 0.6 million.
- For construction and installation, it is the difference between amounts
earned from the construction and installation of works or work items minus
(-) costs of materials and supplies, power, transportation and services
purchased from outside, and other expenses for the construction and
installation of works or work items.
- For transportation activities, it is the difference between collected freight,
loading and unloading charges minus (-) costs of petrol and oil and spare
parts and other expenses for transportation activities.
- For catering activities, it is the difference between amounts earned from
the sale of foods and drinks, service charges and other revenues minus (-)
costs of goods and services purchased for the catering business.
- For trading in gold, silver and gems, it is the difference between sales of
gold, silver and gems minus (-) costs of sold gold, silver and gems.
- Businesses subject to VAT calculation by the tax credit method and
trading in gold, silver and gems subject to the method of tax calculation
directly based on added value shall separately account input VAT amounts
for declaration of VAT amounts payable for different goods and services
subject to different tax calculation methods.
If they cannot separately account input VAT, the creditable input VAT
amount shall be determined according to the proportion of the sales of
goods and services subject to VAT calculated by the tax credit method to
the total sales in the period, of which sales of VAT-liable goods and
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services are the total sales of goods and services subject to VAT calculated
by the tax credit method; total sales of goods and services in the period
include sales of VAT-liable goods and services, sales of goods and
services not liable to VAT and the difference between the sale and
purchase prices of the gold, silver and gem trading (excluding negative (-)
difference).
- For other business activities, it is the difference between amounts earned
from business activities minus (-) costs of goods and services purchased
for the performance of such business activities.
- Businesses paying VAT calculated directly on the basis of added value
may not include the value of assets purchased from outside, invested or
constructed for use as fixed assets in the costs of purchased goods and
services for calculating added value.
- In case there arises in a tax period a negative (-) added value of gold,
silver and gems, it may be cleared against the positive (+) added value of
gold, silver and gems. When there arises no positive (+) added value or
such value is not enough to offset the negative (-) added value, it may be
transferred for deduction from the added value of the next period in the
year. Closing a calendar year, a negative (-) added value may not be
transferred to the following year. Businesses shall declare VAT according
to a set form.
b/ For businesses (other than those applying the tax credit method and
business households and individuals) that sell goods or provide services
and have sufficient sale invoices under regulations or satisfy all conditions
for determining exact sales of goods or services such as contracts and
payment vouchers but have insufficient invoices on purchase of input
goods or services, the added value shall be determined to equal sales
multiplied by (x) the ratio (%) of the added value to the sales.
The ratio (%) of the added value to sales as a basis for determining the
added value is specified as follows:
- Commercial activities (goods distribution and supply): 10%.
- Services and construction (except construction with contracted supply of
materials): 50%.
- Production, transportation, services associated with supply of goods,
construction with contracted supply of materials: 30%.
c/ For business activities and business individuals and households that fail
to observe or fully observe the accounting, invoice and voucher regimes
prescribed by law, VAT shall be paid at a rate (%) prescribed by the
Ministry of Finance.
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Chapter III
TAX CREDIT AND REFUND
Section 1
TAX CREDIT
Article 14. Principles of input value-added tax credit
1. Input VAT on goods or services used for the production of and trading
in VAT-liable goods and services may be wholly credited, including also
the uncompensated input value-added tax on lost VAT-liable goods.
For goods exposed to natural loss in transportation and filling due to their
physic and chemical properties such as petrol, oil, etc., the input VAT
amount on the actual volume of goods lost naturally, which must not
exceed the prescribed loss limit, may be declared and credited. The input
VAT amount on the volume of lost goods exceeding the prescribed limit
may not be credited and refunded.
2. For goods or services used for the production of and trading in both
goods or services liable and not liable to VAT, only the input VAT amount
on goods or services used for the production of and trading in VAT-liable
goods or services is creditable. Businesses shall separately account
creditable and non-creditable VAT amounts. If it is impossible to do so,
input VAT shall be credited according to the ratio (%) of VAT-liable
turnover to total turnover of sold goods or services. Traders of goods or
services liable and not liable to VAT shall monthly allocate VAT amounts
on purchased VAT-creditable goods or services for the month on a
temporary basis. At the year end, they shall calculate the allocation of
creditable VAT amounts for the year for declaration of adjustment of input
VAT amounts which have been credited temporarily by month.
3. Input VAT on fixed assets used for the production of and trading in both
goods and services liable and not liable to VAT may be wholly credited.
Input VAT on fixed assets in the following cases may not be credited but
shall be included in the historical costs of these fixed assets: fixed assets
exclusively used for the manufacture of weapons and military equipment
used in defense and security; fixed assets, machinery and equipment of
credit institutions and reinsurance, life insurance and securities businesses,
hospitals and schools; civil aircraft and yachts not used for commercial
transportation of cargo and passengers, tourist or hotel business.
Input VAT on goods and services which form fixed assets of enterprises,
such as canteens providing shift meals, mid-shift accommodations, free
houses, locker rooms, parking lots, toilets and water tanks for laborers
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working in production or business places, and houses and healthcare
stations for laborers working in industrial parks, may be wholly credited.
For fixed assets being passenger automobiles of 9 seats or less (excluding
automobiles used for commercial transportation of cargo or passengers or
for tourist or hotel business) and valued at more than VND 1.6 billion
(exclusive of VAT), input VAT on the value in excess of VND 1.6 billion
is not creditable.
4. Establishments engaged in agricultural or forestry production,
aquaculture or fishing, organizing closed production processes, accounting
their production and business results in a centralized manner, and using
products at the stage of agricultural or forestry production; rearing and
fishing aquatic or marine products as raw materials for further production
and processing into VAT-liable products (including unprocessed
agricultural, forest and aquatic products for export or processed products
liable to VAT) may declare and credit input VAT on goods and services
purchased for production and business at all stages of capital construction
investment, production and processing. Businesses that have investment
projects for further production and processing or make a written
commitment to further producing VAT-liable products may declare and
credit VAT right from the stage of capital construction. For input VAT
arising in the capital construction stage, enterprises which have made tax
declaration, credit and refund, but are later determined as ineligible for tax
credit and refund, shall declare, adjust and return the credited and refunded
VAT amounts. For businesses that fail to make tax adjustments and are
detected through tax inspection and examination, tax offices shall
retrospectively collect payable tax and refunded tax and impose fines
under regulations. Businesses shall take full responsibility before law for
tax credit and refund-related contents they have reported, committed and
explained to tax offices.
For establishments selling unprocessed or preliminarily processed
agricultural, forest, aquatic or marine products not liable to VAT, the VAT
amount on purchased goods and services may be credited according to the
ratio (%) of sales of VAT-liable goods or services to total sales of goods or
services.
Example 42: Enterprise A investing in rubber farms has an arising input
VAT amount on goods and services at the stage of capital construction. It
does not have products as materials for further production and processing
of VAT-liable products (including also unprocessed exports or processed
products liable to VAT), but has a project to build a rubber latex mill
(liable to VAT) and commits that cultivated products will be further
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processed into VAT-liable products. In this case, the enterprise may credit
all input VAT amounts.
If the enterprise sells rubber latex, which is not liable to VAT, it may not
credit tax.
If the enterprise uses part of its exploited rubber latex for the production
VAT-liable products while selling the other part, input VAT shall be
credited as follows:
- Input VAT amount on fixed assets (rubber farm, processing mill, etc.):
To be wholly credited (including also VAT amounts arising at the stage of
capital construction).
- Input VAT amount on goods and services: To be credited according to
the ratio (%) of sales of VAT-liable goods and services to total sales of
goods and services.
5. Input VAT on goods (including also goods purchased from outside or
goods manufactured by enterprises themselves) used by enterprises as
donations, gifts or presents or for sale promotion or advertising in various
forms to serve the production of and trading in VAT-liable goods and
services is creditable.
6. Input VAT on goods and services used for the production of or trading
in goods and services not liable to VAT under Article 4 of this Circular
may be included in the historical costs of fixed assets, the value of raw
materials or business costs, except the following cases:
a/ VAT on goods and services purchased by businesses for the production
of or trading in goods and provision of services to foreign organizations
and individuals or international organizations for provision of
humanitarian aid or non-refundable aid specified in Clause 19, Article 4 of
this Circular, may be wholly credited;
b/ Input VAT on goods and services used in prospecting, exploring and
developing oil and gas fields to the first day of exploitation or production
may be wholly credited.
7. Input VAT arising in a month may be declared for credit immediately
when the tax amount payable in that month is determined, regardless of
whether relevant goods or services have been delivered for use or remain
in stock.
a/ If businesses detect some invoices not yet declared for input VAT credit,
they may make additional declaration and credit. The time limit for
additional declaration and credit is 6 (six) months from the month when
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missing invoices are issued, except the case provided at Point b of this
Clause.
Example 43: Business A has one value-added invoice on purchase issued
on March 10, 2012. In the tax declaration period of March 2012, its
accountants failed to declare this invoice. Business A may make an
additional tax declaration and credit no later than August 2012.
b/ In case businesses fail to declare the VAT amount paid at the stage of
importation (including also the VAT amount paid at the stage of
importation with tax payment vouchers dated before March 1, 2012), the
input VAT amount for the stage of investment without operation yet may
be additionally declared and credited under the tax administration law.
Example 44: Business B paid VAT at the importation stage according to
the tax payment voucher of March 1, 2012. Due to its accountants’
mistakes, this voucher has not been declared in the VAT declarations of
subsequent months. Business B may make declaration for additional credit
of the VAT amount paid at the importation stage (according to the tax
payment voucher) under the tax administration law.
Example 45: Business Y paid VAT at the importation stage according to
the tax payment voucher dated before March 1, 2012. Due to its
accountants’ mistakes, this voucher had not been declared and was only
detected on March 1, 2012. Business Y may make declaration for
additional credit of the VAT amount paid at the importation stage
(according to the tax payment voucher) under the tax administration law.
c/ Businesses that have issued value-added invoices for sale of goods or
provision of services and then detect VAT-related errors shall issue
invoices for adjustment and supplementation. The time limit for businesses
purchasing goods or services to make additional declaration and credit of
VAT is counted from the time of issuing invoices for adjustment and
supplementation.
8. Businesses may either account non-creditable input VAT amounts as
expenses for enterprise income tax calculation or include them in the
historical costs of fixed assets under law.
9. Corporations’ or groups’ offices that are not directly engaged in
business operations and subsidiary administrative and non-business units
such as hospitals, clinics, sanatoriums, institutes, training establishments,
etc., which are not VAT payers, are not entitled to input VAT credit or
refund for goods and services purchased for their operations.
When these units also deal in VAT-liable goods and services, they shall
separately register, declare and pay VAT for these operations.
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Example 46: The office of Corporation A is not directly engaged in
production and business activities and operates with funds contributed by
subsidiary units. If it leases the unused space of its house (office building),
it shall separately account, declare and pay VAT for the office lease. The
input VAT on goods and services used for the operation of the
Corporation’s office is neither credited nor refunded.
10. Input VAT on goods and services used for the provision of goods and
services not subject to VAT declaration and payment under Article 5 of
this Circular may be wholly credited.
Example 47: Construction Joint-Stock Company X builds a work in Laos.
Apart from materials and supplies exported to Laos for the construction,
Company X has some other expenses arising in Vietnam also for the
construction in Laos such as management expenses. If Company X has
value-added invoices for these expenses (for value-added invoices valued
at VND 20 million or higher, via-bank payment is required), it may declare
and credit all input VAT amounts on these expenses.
11. Businesses may declare and credit VAT on goods and services
purchased through authorization to other organizations or individuals and
authorized organizations or individuals are named in the invoices on such
purchase, including the following cases:
a/ Insurance businesses that authorize insured parties to repair assets and
pay insured parties with corresponding indemnities under insurance
policies for the expenses for asset repair and supplies and spare parts with
value-added invoices indicating insured parties’ names may declare and
credit VAT amounts corresponding to the indemnities paid according to
value-added invoices indicating insured parties’ names. In case
indemnities paid by insurance businesses to insured parties are valued at
VND 20 million or higher, via-bank payment is required.
b/ Before establishing a business, its founders make a written authorization
for an organization or a person to pay some expenses for such
establishment and purchase of goods and supplies. The business may
declare and credit input VAT according to invoices indicating the name of
the authorized organization or person and shall pay that organization or
person via bank for invoices valued at VND 20 million or higher.
12. For non-business individuals and organizations contributing assets as
capital to limited liability or joint-stock companies, documents on
contributed assets are written certifications of capital contribution and
records of asset delivery and receipt. If contributed assets are brand-new,
have not been used, and have lawful invoices accepted by the capital
delivery and receipt council, the value of contributed capital is that
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indicated in the invoices inclusive of VAT. The capital receiving party
may declare and credit VAT amounts indicated in invoices on purchase of
assets of capital contributing parties.
13. Business households that pay VAT by tax calculation directly based on
added value and then change to pay tax by the tax credit method may credit
VAT on purchased goods and services arising from the month of paying
tax by the tax credit method. For goods and services purchased before the
month of paying tax by the tax credit method, input VAT is not creditable.
14. Businesses are not entitled to input VAT credit when:
- Value-added invoices are used in contravention of law such as valueadded invoices not indicating VAT amounts (except particular cases
permitted for use of value-added invoices indicating VAT-inclusive
payment prices);
- Invoices do not indicate or incorrectly indicate one of such items as
name, address and tax identification number of the seller, resulting in
failure to identify the seller;
- Invoices do not indicate or incorrectly indicate one of such items as
name, address and tax identification number of the buyer, resulting in
failure to identify the buyer (except the cases provided in Clause 11 of this
Article);
- Invoices or VAT payment vouchers are false, invoices are erased or
issued without actual provision of goods or services;
- Invoices indicate untrue values of the goods or services traded or
exchanged.
Article 15. Conditions for input VAT credit
1. Having lawful value-added invoices of purchased goods or services or
vouchers of VAT payment at the importation stage or vouchers of VAT
payment for foreign parties under the Finance Ministry’s guidance
applicable to foreign organizations without the Vietnamese legal entity
status and foreigners conducting business or earning incomes in Vietnam.
2. Having vouchers of via-bank payment for purchased goods and services
(including also imported goods) valued at VND 20 million or higher,
except cases in which the total invoiced value of purchased goods or
services at a time is less than VND 20 million calculated at a VATinclusive price.
a/ Voucher of via-bank payment means a document proving the money
transfer from the buyer’s account to the seller’s account opened at payment
service institutions by lawful modes of payment such as check, payment
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order, payment collection, bank card, phone card (e-wallet) and other
modes of payment under regulations (including also the case in which the
buyer makes payment from its account to the seller’s account bearing the
name of a private enterprise owner or from its account bearing the name of
a private enterprise owner to the seller’s account, provided such account is
registered with a tax office for transaction).
Vouchers of the buyer’s deposit of cash into the seller’s account or
vouchers of improper modes of payment under current law are ineligible
for credit and refund of VAT on goods and services purchased at VND 20
million or higher.
b/ Without via-bank payment vouchers, input VAT on purchased goods or
services with an invoiced value of VND 20 million or more calculated at a
VAT-inclusive price at a time is not creditable. Businesses shall declare
these invoices in the section of goods and services ineligible for tax credit
in the list of invoices and vouchers of purchased goods and services.
c/ For goods or services valued at VND 20 million or more purchased on
deferred or installment payment, businesses shall declare and credit input
VAT based on goods or service purchase contracts, value-added invoices
and via-bank payment vouchers of these goods or services, and at the same
time write the payment time limit in the note section of the list of invoices
and vouchers of purchased goods and services. If via-bank payment
vouchers are not available yet as the payment under contracts is not due,
businesses may still declare and credit input VAT.
If via-bank payment vouchers are unavailable when the payment under
contracts is due, businesses may not credit input VAT and shall declare
and reduce input VAT amounts already credited for the value of goods
without via-bank payment vouchers. If businesses have documents proving
via-bank payment after having reduced the input VAT amount credited for
the value of goods or services purchased without via-bank payment
vouchers, they may make additional declaration.
In case the deferred payment under contracts is overdue and businesses fail
to make reductions under regulations but then fully have via-bank payment
vouchers before tax offices announce decisions on inspection at their
offices, businesses shall be sanctioned for violation of tax procedures if
their failure to make reductions does not result in a deficit in payable tax
amounts or an increase in refundable tax amounts. If their failure to make
reductions results in a deficit in payable tax amounts or an increase in
refundable tax amounts, businesses are subject to retrospective collection
of payable tax amounts or refunded tax amounts and shall be sanctioned
under the Tax Administration Law.
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Example 48: In March 2012, Company A purchases a goods lot from
Company B for its production and business. The total value of the
purchase contract is VND 330 million (VAT-exclusive price of VND 300
million, 10% VAT rate of VND 30 million). As agreed under the contract,
Company A will pay Company B in July 2012.
In this case, Company A may temporarily declare an input VAT amount of
VND 30 million in the declaration period of March 2012. When the
payment is due in July 2012, Company A shall provide a voucher of viabank payment of VND 330 million. If it fails to do so, it shall declare a
reduction of temporarily credited VAT amount (VND 30 million).
When the payment is due in July 2012, if Company A can provide a viabank payment voucher but the sum of money indicated on this voucher is
only VND 275 million (corresponding to a tax-exclusive price of VND 250
million and 10% VAT rate of VND 25 million), it may credit only a VAT
amount of VND 25 million (corresponding to the amount paid via bank of
VND 275 million) and, at the same time, shall reduce the creditable VAT
amount (VND 5 million = VND 30 million - VND 25 million) of the
declaration period of March 2012.
In November 2012, Company A can provide vouchers of via-bank payment
with a value of VND 55 million (corresponding a tax-exclusive price of
VND 50 million and VAT amount of VND 5 million), it may make an
additional declaration for credit of the VAT amount of VND 5 million
corresponding to the via-bank payment value of VND 50 million.
Example 49: In November 2012, the tax office issues a decision on VAT
inspection at Limited Liability Company Z. The period to be inspected is
2011 and 5 months of 2012. At the time of inspection, Company Z cannot
produce via-bank payment vouchers for some contracts on deferred
payment which are due in 2011 and 5 months of 2012. The tax office does
not approve Company Z’s declaration for VAT credit for invoices without
via-bank payment vouchers. But in November and December 2012,
Company Z can produce via-bank payment vouchers for invoices
disapproved by the tax office for tax credit. The company may still make
an additional declaration for VAT credit for these invoices in the VAT
declarations of November and December 2012.
d/ Cases regarded as via-bank payment for input VAT credit include:
d.1/ For goods and services purchased by clearing their value against that
of sold goods and services or by goods borrowing, which is specified in
the contract, there must be a record of comparison of figures and
certification by the two parties of such clearing or borrowing. In case of
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debt clearing through a third party, there must be a record of debt clearing
by the three (3) parties as a basis for tax credit.
d.2/ For goods and services purchased by debt clearing such as money
borrowing and lending or debt clearing through a third party, which is
specified in the contract, there must be a borrowing and lending contract
made in writing earlier and a voucher of money transfer from the lender’s
account to the borrower’s, for a money loan, including also the case of
clearing the value of purchased goods and services against the amount the
seller supports the buyer or asks the buyer to make payment on its behalf.
d.3/ In case goods and services purchased are paid for via bank by an
authorized third party (including also the case in which the seller requests
the buyer to make via-bank payment to a third party designated by the
seller), the payment to the third party authorized or designated by the seller
must be specified in a written contract and the third party must be a legal
person or entity currently operating under law.
In case after the above modes of payment are made and the remaining
value of VND 20 million or more is paid in cash, tax may be credited only
for via-bank payments with evidencing vouchers. When declaring input
value-added invoices, businesses shall clearly write the modes of payment
specified in contracts in the note section of the list of invoices and
vouchers of purchased goods and services.
e/ In case a goods or service valued at less than VND 20 million is
purchased from a supplier several times on a day with a total purchase
value of VND 20 million or more, VAT may be credited only for via-bank
payments with evidencing vouchers. The supplier is a VAT payer with tax
identification number and directly declaring and paying VAT.
Article 16. Conditions for input tax credit and refund of exported goods
and services
To be eligible for VAT credit and refund, exported goods and services
(except the cases provided in Article 17 of this Circular) must satisfy all
the conditions and procedures provided in Clause 2, Article 9, and Clause
1, Article 15, of this Circular, specifically as follows:
1. Contracts on sale of goods, processing of goods (for cases of goods
processing), or provision of services to foreign organizations or
individuals. For export consignment, export consignment contracts and
written records of the liquidation of export consignment contracts (if
contracts have terminated) or written records of periodical comparison of
liabilities between the export consignor and consignee, clearly stating the
quantity and category of products, the value of goods already exported
under consignment; the serial number and date of the export contract
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signed between the export consignee and the foreign party; the serial
number and date of, and the sum of money indicated on, the voucher of
via-bank payment made by the export consignee to the foreign party; the
serial number and date of, and the sum of money indicated on, the voucher
of payment made by the export consignor to the export consignee; the
serial number and date of the export consignee’s customs declaration for
the exported goods.
2. Customs declaration of exported goods for which customs procedures
have been cleared under the Ministry of Finance’s guidance on customs
procedures; customs inspection and control; export duty and import duty
and tax administration of exported and imported goods.
To enjoy input VAT credit and refund, businesses exporting software
products in the form of document, file or packaged database shall clear
customs declaration procedures applicable to ordinary goods.
Particularly for the following cases, customs declarations are not required:
- Businesses that export services or software electronically. However,
these businesses shall comply with all regulations on procedures of
certification that the purchaser has received services or software exported
electronically in accordance with the law on e-commerce.
- Construction and installation of works for export processing enterprises.
- Businesses that supply electricity, water, stationery and goods for daily
operations of export processing enterprises, including food, foodstuff,
consumer goods (including also labor safety clothing: trousers, blouses,
caps, shoes, boots and gloves).
3. Exported goods and services subject to via-bank payment
a/ Via-bank payment means the transfer of money from the importer’s
account to the account bearing the exporter’s name opened at a bank
according to the mode of payment agreed under the contract and the bank’s
regulations. Payment voucher means the credit note of the exporter’s bank
of the amount received from the importer’s bank account. In case of
deferred payment, the agreement thereon must be stated in the export
contract, and when payment is due, the business must have a via-bank
payment voucher. In case of export consignment, there must be a voucher
of via-bank payment made by the foreign party to the consignee and the
export consignee shall make via-bank payment for exports to the
consignor.
b/ The following cases of payment are also regarded as via-bank payment:
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b.1/ Payments for exported goods or services are cleared against foreign
loans and businesses satisfy all the following conditions, procedures and
dossiers:
- Borrowing contract (for financial loans of under one year); or loan
registration certificate of the State Bank of Vietnam (for loans of over one
year).
- Voucher on bank account transfer of funds into Vietnam by the foreign
party.
The mode of payment for exported goods or services by clearing against
foreign loans must be stated in the export contract.
- The foreign party’s written certification of the loan clearing.
- Any difference between the value of exported goods or services and the
foreign loan must be paid via bank. Vouchers of such via-bank payment
must comply with this Point.
b.2/ The exporter uses payments for exported goods or services as capital
contribution to an overseas importer and this business satisfies all the
following procedures and dossier requirements:
- It has a capital contribution contract.
- The use of payments for exported goods or services as capital
contribution to an overseas importer is stated in the export contract.
- In case the contributed capital amount is smaller than the revenues from
exported goods, the difference is paid via bank under this Point.
b.3/ The foreign party authorizes a third party that is a foreign-based
organization or individual to make payment and the authorized payment is
stated in the export contract (or an annex or contract modification note, if
any).
b.4/ The foreign party requests a third party being a Vietnam-based
organization to clear liabilities with the foreign party by making via-bank
payment of the amount payable by the foreign party to the exporter, and
this request for liability-clearing payment is stated in the export contract
(or an annex or contract modification note, if any) and there is a payment
voucher being the credit note of the exporter’s bank of the amount received
from the third party’s account, at the same time, the exporter produces the
written record of comparison of liabilities certified by the foreign party and
the third party.
b.5/ The foreign party (the importer) authorizes a third party being a
foreign-based organization or individual to make payment; the third party
requests a Vietnam-based organization (the fourth party) to clear liabilities
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with the third party by making via-bank payment of the amount payable by
the importer to the Vietnamese exporter; and the exporter satisfies all the
conditions and dossier requirements as follows:
- The export contract (or an annex or contract modification note, if any)
provides the authorized payment and clearing of liabilities between parties.
- The payment voucher is the bank’s credit note of the amount received
from the fourth party’s account by the Vietnamese exporter.
- The note of comparison of liabilities certified by involved parties
(between the exporter and importer and between the foreign-based third
party and Vietnam-based fourth party).
b.6/ The foreign party authorizes its Vietnam-based representative office to
make payment to the exporter’s account and this authorized payment is
provided in the export contract (or an annex or contract modification note,
if any).
b.7/ The foreign party makes payment from its current deposit account
opened at a credit institution in Vietnam and this payment is stated in the
export contract (or an annex or contract modification note, if any). The
payment voucher is the credit note of the exporter’s bank of the amount
received from the current account of the foreign purchaser that has signed
the contract.
Also regarded as via-bank payment is the case in which goods are exported
to a foreign purchaser being a private enterprise, the payment is made
through the private enterprise owner’s current account opened a Vietnambased credit institution and such payment is provided in the export contract
(or an annex or contract modification not, if any).
When inspecting tax credit and refund for exported goods paid through
current accounts, the tax office should coordinate with the credit institution
at which the foreign purchaser opens its account to ensure proper and
lawful payment and transfer of funds.
b.8/ In case the foreign party makes via-bank payment but the paid amount
indicated in the payment voucher does not match the amount payable
under the contract or its annex:
- If the paid amount indicated in the via-bank payment voucher is smaller
than the amount payable under the contract or its annex, the business shall
clearly state the reason such as bank transfer charges, price decrease as a
result of goods’ poor quality or lacking quantity (in this case, a written
agreement on price decrease is required), etc.;
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- If the paid amount indicated in the via-bank payment voucher is larger
than the amount payable under the contract or its annex, the business shall
clearly state the reason such as lump-sum payment for many contracts,
payment advances, etc.
The business shall undertake to take responsibility before law for its
reasons given to the tax office and documents on modifications (if any).
b.9/ In case the foreign party makes via-bank payment, but the via-bank
payment voucher is not from the bank of payment named in the contract, if
the payment voucher indicates the names of the payer and payee, the
export contract serial number and the payment value matching the signed
export contract, such voucher is regarded to be valid.
b.10/ The business exports goods or services to a foreign party (second
party) and concurrently imports goods or services from another foreign
party or purchases goods or services from a Vietnam-based organization or
individual (third party); the business reaches agreement with the second
party and the third party on the second party’s via-bank payment to the
third party of the amount payable by the business to the third party and the
clearing of liabilities between the parties is provided in the export, import
or purchase contract (or its annex or modification note, if any) and the
business produces the note of comparison of liabilities certified by the
involved parties (between the business and the second party, and the
business and the third party).
b.11/ In case goods exported to a country are rejected by the foreign
purchaser for objective reasons and the exporter finds another purchaser in
the same country to sell that export batch, the tax refund dossier comprises
the entire export dossier related to the export contract signed with the
original purchaser (contract, customs declaration of exported goods,
invoice), the exporter’s written explanation about the discrepancy in the
purchaser name (covering its commitment to taking responsibility for the
truthfulness of information without any frauds), the entire export dossier
related to the export contract signed with the new purchaser (contract, sale
invoice, via-bank payment voucher under law and other vouchers, if any).
c/ Other cases of payment for exported goods and services as prescribed by
the Government:
c.1/ For businesses sending guest workers abroad which collect money
directly from these workers, receipts of cash amounts paid by these
workers are required.
c.2/ For businesses exporting goods for sale at overseas fairs or exhibitions
which collect and transfer home cash in local currencies of the countries
where these trade fairs or exhibitions are organized, customs declarations
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of foreign-currency amounts from the goods sale transferred home and
vouchers on remittance of these amounts into banks in Vietnam are
required.
c.3/ In case of exporting goods or services to pay the Government’s foreign
debts, the commercial bank’s certification that the exported goods lot has
been accepted by the foreign country for debt payment or that the
document set has been forwarded to the foreign country for debt payment
is required. Payment vouchers in this case must comply with the Finance
Ministry’s guidance.
c.4/ Payment for exported goods or services in kind means the case in
which goods (including goods processed for export) or services are
exported to a foreign organization or individual (referred to as foreign
party for short) but the payment between the Vietnamese enterprise and
foreign party is made by clearing the value of exported goods or services
or exported goods-processing charges against the value of goods or
services purchased from foreign parties.
Exported goods or services paid in kind must satisfy additional dossier
requirements as follows:
- The mode of payment for exported goods in kind is stated in the export
contract.
- The foreign party’s goods or service purchase contract.
- The customs declaration of imported goods paid for exported goods or
services.
- The foreign party’s written certification of the clearing payment between
the exported goods or services and the goods or services imported from the
foreign party.
- When a difference arises from the clearing of the value of exported goods
or services against that of imported goods or services, such difference must
be paid via bank. Vouchers of such via-bank payment must comply with
this Clause.
c.5/ The export of goods to a bordering country under the Prime Minister’s
regulations on management of border trade with bordering countries must
comply with the guidance of the Finance Ministry and the State Bank.
c.6/ Some cases involving other modes of payment for exported goods and
services under related laws.
d/ Cases of export without via-bank payment entitled to tax credit and
refund:
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d.1/ In case of insolvency of the foreign party, the exporter shall make a
written explanation and may use one of the following papers to replace the
via-bank payment voucher:
- The customs declaration of imports from Vietnam registered with a
customs office of the country of importation (1 copy);
- A petition lodged with a court or competent authority of the country in
which the purchaser resides, together with such authority’s notice or
written certification of acceptance of the petition (1 copy);
- A foreign court’s ruling on the exporter’s winning of the lawsuit (1
copy);
- A foreign competent authority’s written certification (or notice) of the
purchaser’s bankruptcy or insolvency (1 copy).
d.2/ For poor quality exports subject to disposal, the exporter shall make a
written explanation and may use the record of disposal (or a written
certification of disposal) of goods overseas made by the disposing
authority (1 copy), together with the voucher of via-bank payment for
disposal expenses payable by the exporter or a paper proving the
purchaser’s or third party’s responsibility for paying disposal expenses (1
copy).
When the importer has to carry out procedures for disposal overseas, the
disposal record (or written certification of disposal) must indicate the
importer’s name.
d.3/ For lost exports, the goods exporter shall make a written explanation
and may use one of the following papers to replace the via-bank payment
voucher:
- Written certification of the loss outside Vietnam by a relevant authority
(1 copy);
- Record of the loss of goods during transportation outside Vietnam,
clearly stating its causes (1 copy);
A goods exporter that has received indemnities for exports lost outside
Vietnam shall send the via-bank payment voucher of the received amount.
Copies of the papers specified at Points d.1, d.2 and d.3 of this Clause are
the certified true copies of goods exporters. In case the language used in a
third party’s vouchers or written certifications to replace via-bank payment
vouchers is other than English or without an English version, a notarized
translation is required. If involved parties issue, use and store vouchers
electronically, the hard copies of those vouchers are required.
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Goods exporters shall take full responsibility for the accuracy of papers
replacing via-bank payment vouchers in the above cases.
4. Value-added invoices for sale of goods or provision of services, or
export invoices or invoices of payment for processing of goods.
Article 17. Conditions for input VAT credit and refund in some cases in
which goods are regarded as exports:
1. Intermediary processed goods as prescribed in the commercial law
regarding international goods trading and goods trading and processing
agency with foreign countries:
a/ Export processing contract and its annexes (if any) signed with the
foreign party, clearly stating the goods recipient in Vietnam.
b/ Value-added invoice clearly stating the processing charge and the
quantity of processed goods delivered to the foreign party (at the rate
provided in the contract signed with the foreign party) and the name of the
goods recipient designated by the foreign party.
c/ Bill of delivery of intermediary processed products (referred to as
delivery bill for short), with certifications of the deliverer and the recipient
of intermediary processed products and certification of the customs office
managing the processing contract of the deliverer and recipient.
d/ Payment for goods processed for foreign parties must be made via bank
under Article 16 of this Circular.
The procedures for delivery and receipt of intermediary processed goods
and delivery bills are as guided by the General Department of Customs.
Example 50: Company A signs with a foreign party a contract to process
200,000 pairs of shoe soles for export. The processing charge is VND 800
million. The contract clearly states that the shoe soles will be delivered to
Company B in Vietnam for production of finished shoes.
In this case, Company A is regarded as undertaking the intermediary
processing of products for export. On the voucher of delivery of shoe soles
to Company B, Company A shall clearly write the quantity, category and
specifications of products delivered. The whole turnover of VND 800
million from the processing of shoe soles is entitled to the VAT rate of 0%.
2. Processed goods for on-spot export under law:
a/ Goods trading contract or processing contract designating goods
delivery in Vietnam;
b/ Customs declaration of on-spot exports or imports for which customs
procedures have been cleared;
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c/ Value-added invoice or export invoice, clearly stating the names of the
foreign purchaser and goods recipient and the place of delivery in
Vietnam;
d/ Payment for goods sold to foreign traders but delivered in Vietnam shall
be made via bank in a freely convertible currency. Via-bank payment
vouchers comply with Clause 3, Article 16 of this Circular. When the onspot importer is authorized by the foreign party to pay the on-spot exporter,
the currency of payment complies with the foreign exchange law;
e/ On-spot exports of foreign-invested enterprises must comply with their
investment licenses.
3. For goods and supplies exported by Vietnamese enterprises to
implement overseas construction projects, procedures and dossiers for
Vietnamese enterprises implementing these projects to enjoy input VAT
credit or refund must satisfy the following requirements:
a/ There is a customs declaration under Clause 2, Article 16 of this
Circular.
b/ Exported goods and supplies conform with the list of goods exported for
the implementation of an overseas construction project approved by the
director of the Vietnamese enterprise implementing that project.
c/ There is an export consignment contract (for export consignment).
4. For goods and supplies sold by domestic businesses to Vietnamese
enterprises for the implementation of overseas construction projects and
delivered overseas under signed contracts, procedures and dossiers for
domestic sellers to enjoy input VAT credit or refund for exported goods
must satisfy the following requirements:
a/ There is a customs declaration under Clause 2, Article 16 of this
Circular;
b/ Exported goods and supplies conform with the list of goods exported for
the implementation of an overseas construction project approved by the
director of the Vietnamese enterprise implementing that project;
c/ There is a trading contract signed between the domestic business and the
Vietnamese enterprise implementing the overseas construction project,
clearly stating delivery conditions and quantity, category and value of
goods;
d/ There is a consignment contract (in case of export consignment);
e/ There is a via-bank payment voucher;
f/ There is a value-added invoice on goods sale.
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Businesses with exported goods or goods regarded as exports mentioned in
Articles 16 and 17 of this Circular that have customs certifications (for
exported goods) but lack other formalities and documents as required for
each particular case are neither required to calculate output VAT nor
entitled to input VAT credit. Particularly for cases involving intermediary
processed goods and on-spot exported goods, businesses that lack one of
the required formalities or documents shall calculate and pay VAT as for
domestically sold goods. Businesses providing export services that fail to
satisfy the condition on via-bank payment or the condition for being
regarded as via-bank payment may enjoy neither the 0% VAT rate nor
VAT credit, but are not required to calculate output VAT.
Section 2
TAX REFUND
Article 18. Beneficiaries and cases of VAT refund
1. Businesses that pay tax by the tax credit method may be considered for
tax refund if they have input VAT amounts not fully credited for three or
more consecutive months.
The refundable tax amount is the input tax amount not yet fully credited by
the time of request for tax refund.
Example 51: Enterprise A declares input and output VAT amounts as
follows:
(Unit of calculation: VND million)
Tax
declaration
month (1)
Previous
period’s input
tax
to
be
credited (2)
Input
tax
Output tax
creditable in
arising in the
the
month
month (4)
(3)
Payable (or
creditable)
VAT in the
period
March 2012
0
200
100
-100
April 2012
-100
300
350
- 50
May 2012
-50
300
200
-150
In the above example, Enterprise A has an accumulative input tax amount
for 3 consecutive months larger than the output VAT amount. Enterprise A
is entitled to a VAT refund not exceeding VND 150 million.
2. Businesses established under investment projects that have made
business registration and registered to pay VAT by the tax credit method,
or under oil and gas exploration and development projects still at the
investment stage and not yet in operation are entitled to VAT refund for
goods and services used for investment in each year if their investment
duration has lasted for one year or more. If the accumulated VAT amount
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for purchased goods and services used for investment is VND 200 million
or more, businesses are entitled to VAT refund.
3. Operating businesses paying VAT by the tax credit method that have
new investment projects still at the investment stage shall make
declarations for clearing VAT amounts on goods and services purchased
for new investment projects against VAT amounts on their ongoing
production and business activities.
After clearing, any uncredited VAT amount on goods and services
purchased for investment which is VND 200 million or more may be
refunded for investment projects. If the input VAT amount on production
and business activities and investment projects is less than VND 200
million and has not been fully credited for 3 months, businesses may enjoy
VAT refund under Clause 1 of this Article.
Operating businesses paying VAT by the tax credit method that have
investment projects on new production facilities in provinces or centrally
run cities other than those in which they are headquartered, which are still
at the investment stage, have neither commenced operation nor made
business and tax registration, and have VAT amounts of VND 200 million
or more on goods and services purchased for investment, these VAT
amounts may be refunded for investment projects. In this case, businesses
shall make separate tax declarations and refund dossiers. If a project has a
management unit, this unit shall register, declare and make separate tax
refund dossiers with the local tax office with which it has made tax
registration (other than the project management unit in the same province
or city in which the business is headquartered. In this case, the business
shall make VAT refund dossiers). When an investment project to establish
a new business is finished and has completed procedures for business
registration and tax payment registration, the business being the project
owner shall summarize arising VAT amounts, refunded VAT amounts and
to-be-refunded VAT amounts of the project for transfer to the new
business which shall declare and pay, or request refund of, VAT to the
directly managing tax office under regulations.
4. If in a month, a business exports goods or services and has an uncredited
input VAT amount of VND 200 million or more on exported goods in that
month, it may be considered for VAT refund on a monthly basis.
If in a month, a business both exports and domestically sells goods or
services and has an uncredited input VAT amount of VND 200 million or
more on exported goods or services in that month, but after being cleared
against the output VAT on domestically sold goods or services as indicated
in the tax declaration of the month concerned, its uncredited input VAT
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amount is less than VND 200 million, the business may not be considered
for VAT refund on a monthly basis. If the uncredited input VAT amount
on exported goods or services is VND 200 million or more, the business
may be considered for VAT refund for exported goods or services on a
monthly basis.
In case of unability to separately account the input VAT amount for
exported goods or services, such amount shall be allocated based on the
ratio (%) of revenues from exported goods or services in the period to total
revenues of the business in that period.
Entities entitled to VAT refund in some cases of export include
establishments consigning their goods for export, in case of export
consignment; establishments entering into export processing contracts with
foreign parties, in case of intermediary export processing; establishments
entering into export processing contracts with foreign parties, in case of
intermediary processing; businesses having goods and supplies exported
for overseas construction projects, in case of goods exported for overseas
construction projects; and businesses having on-spot exports, in case of
on-spot exports.
5. Businesses shall finalize tax upon their division, split, dissolution,
bankruptcy, ownership transformation; or assignment, sale, contracting or
lease, for state enterprises, when they have input VAT amounts not yet
fully credited or any overpaid VAT amounts.
A business still at the investment stage without any production and
business activities yet that is dissolved without any arising output VAT
amount for its main business line under the investment project may not
enjoy VAT refund. If such business has received a refunded amount for its
investment project, such amount shall be returned to the state budget.
6. Refund of paid VAT amounts for programs and projects funded with
non-refundable official development assistance (ODA) or non-refundable
or humanitarian aid:
a/ For projects funded with non-refundable ODA: Program or project
owners or principal contractors or organizations designated by foreign
parties to manage programs or projects may enjoy refund of VAT amounts
paid for goods and services purchased in Vietnam for these programs or
projects.
b/ Vietnamese organizations that use humanitarian aid money of foreign
organizations or individuals to purchase goods and services for programs
or projects funded with non-refundable or humanitarian aid in Vietnam
may enjoy refund of VAT amounts paid for these goods and services.
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Example 52: The Red Cross Society receives VND 200 million as aid from
international organizations to purchase humanitarian relief for inhabitants
in provinces hit by natural disasters. The VAT-exclusive value of
purchased goods is VND 200 million and the VAT amount is VND 20
million. The Red Cross Society will be refunded a tax amount of VND 20
million.
The refund of paid VAT amounts for non-refundable ODA-funded
programs and projects complies with the Finance Ministry’s guidance.
7. Persons entitled to diplomatic privileges and immunities under the
Ordinance on Diplomatic Privileges and Immunities who purchase goods
or services in Vietnam for use may be refunded paid VAT amounts
indicated in value-added invoices or payment vouchers indicating VATinclusive payment prices.
8. Businesses having tax refund decisions of competent authorities under
law.
Article 19. VAT refund conditions and procedures
1. Businesses and organizations entitled to VAT refund mentioned in
Clauses 1, 2, 3, 4, 5 and 8, Article 18 of this Circular must be businesses
paying tax by the credit method, have obtained an enterprise registration
certificate or investment license (professional practice permit) or
establishment decision of a competent agency, have a seal under law; open
and keep accounting books and vouchers under the accounting law; and
have a bank account according to their tax identification numbers.
2. Businesses that have declared for tax refund in the VAT declaration
forms may not transfer the input tax amount already requested for refund to
the creditable tax mount of the subsequent month.
3. VAT refund procedures comply with the Tax Administration Law and
its guiding documents.
Article 20. Places of tax payment
1. Taxpayers shall make VAT declaration and payment in localities in
which they carry out production or business activities.
2. Taxpayers that declare and pay VAT by the credit method and have
dependent cost accounting production establishments based in provinces or
centrally run cities other than those in which they are headquartered shall
pay VAT both in localities in which their production establishments are
based and localities in which they are headquartered.
3. VAT declaration and payment comply with the Tax Administration Law
and its guiding documents.
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Chapter IV
ORGANIZATION OF IMPLEMENTATION
Article 21. Effect
1. This Circular takes effect on the effective date (March 1, 2012) of the
Government’s Decree No. 121/2011/ND-CP of December 27, 2011, and
replaces the Finance Ministry’s Circular No. 129/2008/TT-BTC of
December 26, 2008, and Circular No. 112/2009/TT-BTC of June 2, 2009.
2. For real estate transfer contracts signed with customers from January 1,
2009, to before March 1, 2012, under which the first time of payment was
from January 1, 2009, and made before March 1, 2012, if the collected
payments are not lower than 20% of the total payment values of those
contracts, the deductible land price still complies with the Finance
Ministry’s Circular No. 129/2008/TT-BTC of December 26, 2008, and the
Ministry of Finance’s guiding documents.
For real estate transfer contracts signed with customers before March 1,
2012, under which the first time of payment is after March 1, 2012, or the
payments collected before March 1, 2012, are lower than 20% of the total
payment values of those contracts, the deductible land price complies with
the Government’s Decree No. 121/2011/ND-CP and this Circular.
3. To annul provisions on temporary refund of 90% of the input VAT
amount for exported goods for which customs procedures have been
cleared since January 1, 2012, and which are pending via-bank payment by
foreign parties under export contracts, of the Finance Ministry’s Circular
No. 94/2010/TT-BTC of June 30, 2010, guiding VAT refund for exported
goods.
The settlement of refund of the remaining 10% VAT amount (of dossiers
for which 90% of VAT amounts have been temporarily refunded as
mentioned above) and other issues still complies with the Finance
Ministry’s Circular No. 94/2010/TT-BTC.
4. Other effective circulars of the Ministry of Finance guiding VAT
continue to be effective.
Article 22. Collection of VAT
1. Tax offices shall organize and administer the collection and refund of
VAT for businesses.
2. Customs offices shall organize and administer the collection of VAT for
imports.
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Any problems arising in the course of implementation should be promptly
reported by units and businesses to the Finance Ministry for timely
settlement.For the Minister of Finance
Deputy Minister
DO HOANG ANH TUAN
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